Home Warranty Insurance (NSW Builders)

Builders Warranty, also known as Home Warranty Insurance, serves as a protective measure for homeowners in the event of unforeseen circumstances. It provides coverage if the builder loses the deposit, fails to complete the job, or delivers defective work. Additionally, coverage extends to situations where the builder dies, disappears, or faces bankruptcy.

In New South Wales, the Home Building Compensation Fund (HBCF) acts as a safety net for homeowners grappling with incomplete or faulty building work performed by builders or tradespersons.

Licensed contractors engaged in residential projects valued at over $20,000 are mandated to acquire insurance through the HBCF. This insurance must be secured before initiating any work or accepting payments, including deposits, under the contractual agreement.

Home Building Compensation Fund

Our Methodology: Evaluating Builder and Tradesperson Eligibility

Our approach centres on conducting a comprehensive risk assessment of builders and tradespeople to ascertain their qualification for insurance coverage. Certificates of Eligibility provide a breakdown of the scope of work a contractor is authorised to undertake. Upon confirmation of eligibility, builders or tradespeople can proceed to request a Certificate of Insurance tailored to the specific projects they have contracted to fulfil.

Comprehensive Homeowner Protection: Our Coverage Details

Our insurance coverage provides homeowners with robust protection against losses stemming from defective or incomplete work. This safeguard is applicable in various scenarios involving the builder or tradesperson:

Financial Instability:

  • Insolvency of the builder.
  • Death of the builder.
  • Disappearance of the builder.

Licence Suspension by NSW Fair Trading:

  • Suspension of the building license due to non-compliance with a money order issued by the NSW Civil and Administrative Tribunal or a court in favor of the homeowner.

Failure to Commence Work:

  • Loss of deposit under the building contract, claimable within 12 months from the failure to commence work.

Failure to Complete Work:

  • Up to 20% of the contract price (including any variations), claimable within 12 months from the cessation of work.

Major Defects:

  • Cost of repair, claimable for up to 6 years from the completion of the work. If defects are identified in the last 6 months of the insurance period, homeowners can claim within 6 months of awareness.

Non-Major Defects:

  • Cost of repair, claimable for up to 2 years from the completion of the work. If defects are discovered in the last 6 months of the insurance period, homeowners can claim within 6 months of awareness.
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FAQ's about Home Warranty Insurance (NSW Builders)

  • Why do I need Home Warranty Insurance?

    Home Warranty Insurance, is a mandatory insurance policy required in New South Wales (NSW) and other parts of Australia for residential building work. This insurance is essential for protecting homeowners from potential risks associated with building and renovation projects, ensuring regulatory compliance, and maintaining high standards of quality and financial stability in the construction industry.

  • How do I obtain or update my eligibility limits?

    If you want to increase your cover or need help maintaining your eligibility, work alongside BEA Insurance Brokers and together we can ensure that the financial information presented represents your business in the strongest possible position and help you take control of your own growth.

  • Who typically obtains Home Warranty Insurance?

    In New South Wales (NSW), Australia,  Home Warranty Insurance, is typically obtained by the builder or contractor undertaking the residential construction work.

    Here’s a breakdown of who is responsible for obtaining this insurance:

    1. Builders and Contractors: For residential building projects exceeding a certain value (often $20,000 or more), builders and contractors are required to obtain Domestic Building Insurance on behalf of the homeowner before starting the work. This insurance must be in place to cover the construction period and a specified warranty period after completion, providing protection against defects and non-completion.
    2. Owner-Builders: In some cases, owner-builders (homeowners who take on the role of the builder for their project) may be required to obtain this insurance if they intend to sell the property within a certain period after the completion of the work. The requirement for owner-builders to provide insurance to future buyers aims to ensure that subsequent homeowners are also protected.
    3. Developers/Project Managers: When a development or project involves residential construction, the entity overseeing the project, whether a developer or a project manager, must ensure that Domestic Building Insurance is obtained if the work falls within the scope that requires coverage. This ensures that all units or homes within the development are covered against builder-related risks.

    The specific requirements, including the threshold value of work that necessitates this insurance and the duration of coverage post-completion, can vary based on the governing body’s regulations. In NSW, the Department of Fair Trading oversees the building and construction industry, and it provides detailed guidelines and requirements for Domestic Building Insurance.

    This insurance framework is designed to ensure that homeowners are protected and that builders and contractors are held to a standard of accountability and financial stability. By requiring builders and relevant parties to obtain this insurance, NSW aims to maintain confidence in the residential construction industry and protect consumers from potential risks.

  • How long does Home Warranty Insurance coverage last?

    In New South Wales (NSW), the coverage duration for Home Warranty Insurance typically extends up to 6 years for structural defects after the work is completed, and 2 years for non-structural defects. These periods are designed to ensure homeowners have adequate protection against major and minor building issues that may arise post-construction. The specific start date for these coverage periods can vary, often beginning from the date of completion, the date of occupancy, or the date the contract was terminated.

  • What are the penalties for builders who do not obtain Home Warranty Insurance when required?

    In New South Wales (NSW), builders who fail to obtain the required Home Warranty Insurance face serious penalties, including substantial fines and the potential suspension or cancellation of their building license. These penalties are enforced by regulatory bodies such as NSW Fair Trading to ensure compliance with the law, which mandates this insurance for residential building projects valued over a certain amount (typically $20,000 or more). Additionally, non-compliant builders risk prosecution, which can lead to legal proceedings and further penalties. Beyond these formal sanctions, builders also face reputational damage, which can significantly impact their ability to secure future projects and maintain trust within the industry and with clients. These measures are in place to protect homeowners and ensure that builders meet their legal and professional responsibilities.