What is HBCF Insurance (Home Warranty Insurance)

Home Building Compensation Fund (HBCF) insurance is required for all home building construction or renovation projects exceeding $20,000 (including GST) unless exempt.

Licensed contractors that take on residential work over $20,000 need insurance cover through HBCF. They must obtain this cover before starting any work or taking any money under the contract, including the deposit. Once insured they will be issued with a certificate issued by iCare.

Before you start building

Building professionals and trades businesses (tradies) that contract with homeowners must buy home building compensation insurance for work over $20,000 (including GST) for:

• constructing new homes and new apartment buildings (up to three storeys)

• renovation of all home buildings regardless of height of the buildings.

• swimming pools

The builder must include information about the home building compensation insurance in their building contract with you.

They must give you the certificate of insurance before they ask for or take any payment for the work (including a deposit), and before they start the work.

You should:

• make sure you get the certificate of insurance for the work before you hand over any money

• check that the business name shown on the certificate matches the business name on the contract for the work

• check the contractor's licence is current through NSW Licence Check - make sure you click through and down through the licence details to check for any compliance history, enforcement and disciplinary records

• check that the certificate is genuine by entering the certificate number in the online Home Building Compensation (HBCF Check) tool, which is the public register of home building compensation insurance.

Before buying a new or renovated home

If you are buying a recently built or renovated home, you will also be covered by the insurance for the duration of the warranty period.

Check that there is a certificate of insurance included with the contract for sale and speak to your solicitor or conveyancer if you are uncertain. You can also check that the certificate is genuine and whether there have been any claims paid on the insurance by entering the certificate number in the online Home Building Compensation (HBCF Check) tool, which is the public register of home building compensation insurance.

What the insurance covers

You are insured for up to $340,000 (limits apply) if the business responsible for the work on your home cannot meet its obligations.

Home building compensation insurance covers:

• incomplete work due to contract termination

• breaches of statutory warranty, meaning work that:

  • lacks due care or skill

  • does not match the plans or specifications

  • uses unsuitable materials

  • violates legal standards

  • is not completed on time or within a reasonable period

• faulty design by the building business

• costs for alternative accommodation, moving and storage

• lost deposits or progress payments

• legal or other costs for seeking compensation

• costs to rectify the loss or damage

• issues caused by the building businesses' subcontractors

• problems resulting from attempts to fix issues after the work is complete.

When you can lodge a claim

You can lodge a claim if your builder or tradesperson has:

• died

• become insolvent

• disappeared

• had their licence suspended due to non-compliance with a money order of the Tribunal or a Court in your favour.

This covers you for:

• loss of deposit and incomplete work (12 months after failing to start or stopping the work)

• defective work (6 years for major defects) and 2 years for other losses).

This covers homeowners and future homeowners when a building business is unable to complete building work or rectify defects due to:

• insolvency

• death

• disappearance (not able to be found)

• a licence suspension following non-compliance with a money order made by a court or the NSW Civil and Administrative Tribunal in favour of the homeowner.

If you are contracting a business to do more than $20,000 of work on your home, it is important that you check the business has valid insurance for the work on your home before you pay any money to the business (including the deposit) and before the work starts. You may also wish to check for insurance when buying a new home, or a home built or renovated within the previous 6 years.

Check for Insurance at your property.