Home Warranty Insurance (also known as Home Building Compensation Fund - HBCF)

Do you know what Home Warranty Insurance is and why it’s so important? Not many homeowners do, which can be extremely dangerous and can put your entire project at risk.

All builders need to have their own insurance, but not knowing exactly what it covers, and whether you’re covered in a worse case scenario, will leave you in a very precarious position.

A professional builder should have at least two types of insurance as a bare minimum . Public Liability Insurance and Contract Works Insurance. Public Liability Insurance is designed to protect the builder against claims resulting from a loss to a third party (i.e the public) that occurs on-site. Contract Works Insurance protects the builder and their assets should any loss, damage or injury occur whilst undertaking a construction project. Which is great… for the builder!

So where’s your protection should anything go wrong? This is where Home Warranty Insurance comes in. It’s not an insurance policy for the builder, it’s an insurance policy for you! If your project is valued at $20,000 or more, then your builder is legally required to apply for Home Warranty Insurance on your behalf, so it should ring alarm bells if the builder you’re working with isn’t providing this.

You may be working with a builder who has told you that they’re insured, which means you’re covered, right? Wrong! Home Warranty Insurance isn’t a policy that is taken out as a once off to cover the builders projects. It is a policy that is applied for on a project by project basis and a certificate is given to both the builder and you before any construction work is allowed to commence.

Without Home Warranty Insurance you’d either be forced to cough up way more than you ever planned or be left with half finished or defected work due to not being able to afford to fix it. These are only two examples of what could go wrong in the short term, can you imagine the damage it would do in the long term?!

Key Highlights

Home Building Compensation Fund cover acts as a safety net for homeowners in New South Wales so they don’t suffer financial loss as a result of incomplete and defective work carried out by a builder or tradesperson who disappears, dies, becomes insolvent or has their license suspended. It’s a statutory product required by law .

• Homeowners can be compensated up to $340,000 for six years from date of completion of major/structural works
• The same amount applies for two years from date of completion of minor/non-structural works

Why might I need HBCF Home Warranty Insurance?

 Failure to take out HBCF cover isan offence under New South Wales law. Cover acts as a protection for the home owner against financial loss suffered by them (and any subsequent owner, as long as the policy has not been exhausted by a prior claim) when a builder or tradesperson can’t complete contracted work or meet a valid claim for defective or unsatisfactory building work. This can happen when that person:

• dies
• disappears
• becomes insolvent
• has had their license suspended due to non-compliance with an order by the NSW Civil and Administrative Tribunal or court to pay the homeowner money

The cover also applies if the builder is trading through a business entity which ceases to exist or becomes insolvent.

So don't risk it, make sure your builder has Home warranty insurance (HBCF) for your peace of mind.