Builders Warranty Insurance

Essential protection for licensed builders

Builders Warranty Insurance provides vital protection during residential construction or renovation, offering peace of mind to both builders and homeowners. If problems such as major defects or incomplete work arise after the project is finished, this insurance helps to ensure that homeowners are financially protected and not left to carry the burden alone.

Builders Warranty Insurance (also known as Home Warranty Insurance) provides a safety net for homeowners to compensate for losses due to faulty workmanship and incomplete building work if their builder dies, disappears or becomes insolvent and can’t pay off their debts.

What does Builders Warranty Insurance Cover?

Builders Warranty Insurance protects homeowners in the event that a builder is unable to rectify defects or complete the work due to reasons such as bankruptcy, death, or disappearance. It covers major structural defects and ensures that homeowners are compensated if the builder fails to fulfill their obligations under the contract.

A Builders Warranty Insurance policy typically provides cover for:

• Major defects: Protection for structural issues that affect the building’s integrity and safety.
• Non-Completion of work: Coverage if the builder is unable to finish the project due to circumstances such as financial collapse or death.
• Failure to Rectify Defects: If the builder doesn’t fix defects within the agreed timeframe, the insurance ensures homeowners aren’t left with the burden.

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Do I need Builders Warranty Insurance?

Builders Warranty Insurance is a legal requirement under State/Territory law in all states except Tasmania. It applies to builders engaged in domestic building contracts where the contract value exceeds the threshold set by each state.

If you are a licensed builder, you may be required to secure Builders Warranty Insurance before commencing work. This insurance ensures compliance with regulations and protects your clients from financial loss due to non-completion or defective work caused by your insolvency, death, or disappearance.

Keep in mind that specific thresholds and requirements vary by state, so it's important to check the regulations relevant to your project.

As a guide, you will need to get cover when the value of your building works go above the below amount in various states:

• New South Wales, Western Australia, and the Australian Capital Territory: $20,000
• Victoria: $16,000
• Northern Territory and South Australia: $12,000
• Queensland: $3,300 ($1,100 for Hydraulic Services Design)

If it’s a requirement in your state to get Builders Warranty Insurance, your contractor should arrange it for you. But it’s best to get a copy of the paperwork proving it before you sign the contract to be sure you’re covered.

Your will need a copy of the builders warranty certificate from your builder to make a claim.