14 Dec 2015
How Builders' Warranty insurance works
Article

How Builders' Warranty insurance works

Confused about Builders Warranty insurance? You’re not alone. Here are the basics.

Are you building a house? A pool? Or maybe a much-needed extension? Whatever it is, planning your project and seeing it through to completion can be an exciting experience.

Hopefully your builder will do a great job and your dream will become reality without any major hitches. But things can and do go wrong and, if your contractor doesn’t deliver the finished product or their work isn’t up to scratch, you can be left out of pocket. That’s where Builders Warranty insurance may come into play.

What is it?

It’s insurance that covers a builder’s client for loss of deposit, failure to start or finish a job and defective work on a completed job. If this happens to you, the first step is to try and recover your costs directly from your builder. But if they’ve died, disappeared or become insolvent that might not be possible. If so, you may be able to claim on the Builders Warranty policy covering your building contract.

Is it a requirement in my state?

The rules vary from state to state, but in many places it’s a legal requirement for jobs above a certain dollar amount. Different states also give it different names, but the basic legal protections are the same.

State Known as Legal requirement? More information
ACT Residential Building Warranty Insurance Yes, for work valued over $12,000 ACT Government Planning
NSW Home Building Compensation Fund Yes, for work valued over $20,000 Home Building Compensation Fund
NT N/A

No

Northern Territory Government
QLD Home Warranty Insurance Yes, for work valued over $3,300 Queensland Building and Construction Commission
SA Building Indemnity Insurance Yes, for work valued over $12,000 Consumer and Business Services
TAS Residential Building Warranty Insurance No, in Tasmania it's a voluntary scheme WorkSafe Tasmania
VIC Domestic Building Insurance Yes, for work valued over $20,000 Victorian Managed Insurance Authority
WA Home Indemnity Insurance Yes, for work valued over $20,000 WA Department of Commerce

This information is intended as a general guide only. Please check with you local building authority for the most up to date information.

How do I get it?

You don’t have to do anything. If Builders Warranty is a legal requirement for your project, your contractor will purchase it for you. No building work can be done without it. That’s because builders must submit proof of insurance to your local council before your development application can be approved.

When you sign a contract with your builder, they should provide you with a copy of the Builders Warranty certificate (which details your building contract). You’ll need this certificate to make a claim.

How to claim

To find out how to claim on QBE Builders Warranty insurance, see our Builders Warranty claim checklist – a simple guide to the claims process.

Are you an owner builder looking to sell your home? Go to Owner Builder Warranty to find out whether you need cover.


This advice is general in nature and has been prepared without taking into account your objectives, financial situation or needs and may not be right for you. You must decide whether or not it is appropriate, in light of your own circumstances, to act on this advice. To decide if QBE’s products are right for you, please ensure you obtain and consider the Policy Wording or Product Disclosure Statements and Target Market Determinations, available online at QBE.com/au. Insurance issued and underwritten by QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFSL 239545).

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