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.

The advice on this website is general in nature and has been prepared without taking into account your objectives, financial situation or needs. You must decide whether or not it is appropriate, in light of your own circumstances, to act on this advice. You should ensure you obtain and consider the Policy Wording or Product Disclosure Statement and Target Market Determination for the policy before you make any decision to buy it.

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