What is home building compensation cover?
Home building compensation (HBC) cover (formerly known as home warranty insurance), helps home owners if their builder is unable to complete building work or fix defects because of insolvency, death, disappearance, or licence suspension.
Before licensed builders and trade contractors can contract to work on certain residential building jobs, they need to have home building compensation (HBC) cover.
To be eligible to apply for HBC cover you'll need to have:
- a contractor licence for building, trade or specialist work
- an ABN/ACN.
HBC cover protects your customer if you cannot complete building work or honour your warranty obligations.
When is HBC cover required?
You must hold HBC cover of at least $340,000 before you start any work or take any money (including a deposit) for any residential home or renovation project where the:
- work is contracted with a home owner, owner-builder or developer
- contract price or market cost of labour and materials is over $20,000, including GST
- project is not exempt from insurance.
Note: You do not need HBC cover if you subcontract the work from another licensed contractor.
Projects that typically require HBC cover include:
- alterations or renovations of residential buildings of any height
- construction of a:
- house
- duplex or triplex
- low-rise residential multi-unit building (up to 3 storeys high)
- structure associated with a home, such as a backyard swimming pool, spa, garage or outbuilding.
Use the HBC Assist tool to check if a job needs HBC cover.
Jobs with HBC cover are listed on HBC check. This is a free public register that anyone can access to verify that a builder or tradesperson has valid cover for the residential work they're doing in NSW.
Applying for HBC cover
To apply for HBC cover you’ll need to:
- Find an insurance broker distributor from icare HBCF’s list.
- Get a certificate of eligibility from your broker distributor.
- Submit your application for HBC cover through your broker distributor.
You must:
- take out HBC cover for each job
- provide the certificate of insurance to your client before you take a deposit or start work.
It is an offence under NSW law to not do this.
HBC cover claims
Your customer can make a claim on your HBC cover if you're unable to complete building work or honour your warranty obligations, because:
- you've had your licence suspended for failing to comply with a court or tribunal order to compensate them, or
- you die, disappear or become insolvent.
The State Insurance Regulatory Authority (SIRA) regulates the HBC scheme, and icare HBCF is the only insurer provider that offers HBC cover.
Links
SIRA
- All about home building compensation cover
- HBC cover for builders and tradies
- Home building compensation cover – advice for home owners
- HBC (eligibility) insurance guidelines – PDF
- Home building compensation reforms