Contractor insurance requirements
About home warranty insurance
Home warranty insurance is a protection for homeowners. It provides cover in situations where the contractor fails to complete the work, the work is defective, or subsidence occurs.
When can a homeowner make a claim?
If you won’t or can’t finish the work under a contract, or fail to fix defects, an owner can make a claim.
However, while the insurance helps the homeowner to complete a project or fix defects, it doesn’t mean that you are no longer responsible. Once we have paid a claim, we will recover the amount from you.
It’s therefore important to always comply with your contract and rectify any defects in your work.
The work is covered for a period of 6 years 6 months from the date (whichever is earlier):
- the premium is paid
- a contract is entered, or
- work is commenced
The period of cover is extended where the work takes longer than 6 months to complete.
When do you pay?
You must pay a premium for all insurable residential construction work with a market value over $3,300.
Specific types of work scenarios are covered in our When does Home Warranty Insurance have to be paid? (PDF) table. Please note changes in legislation have expanded the list of insurable works.
For contracts signed on or after 28 October 2016, the Queensland Home Warranty Scheme has been expanded to include:
- The erection, construction or installation of a residential swimming pool.
- In relation to a residence or related roofed building (e.g. shed):
- All building work performed within the building envelope (internal and external parts of the building), for example, painting, tiling, plastering, roof restoration and repair work, rendering of walls, floor restoration, and glazing work.
- Anything attached to the building if it requires building approval or plumbing approval.
- Any structure attached to the external part of the building where there is no other supporting structure (eg: awning or handrail).
- Stairs or an access ramp which are permanently attached to the building.
- In relation to plumbing and drainage for a residence or related roofed building:
- Building work for the primary water supply (eg: install water tank for primary water supply)
- Building work for sewerage or drainage (eg: work on a sanitary drain connecting a residence to the sewerage main).
- Stormwater drainage (eg: repair of downpipe or gutter)
- The installation of a manufactured home fixed to land in a residential park.
Further information can be found in our factsheet Expanded cover under Queensland Home Warranty Scheme (PDF).
Generally, you pass the cost onto your client and it should be included in the contract price.
Commercial Construction is not insurable unless some of the work is residential construction. This would include, for example, a three story unit complex with the bottom storey comprising shops.
Who is responsible for paying the premium?
The contractor working directly for the homeowner, often called the principal contractor, is required to collect the premium from the owner and pay it to the QBCC on behalf of the owner. Depending on the type of residential construction work being carried out, a principal contractor could be a builder or trade contractor.
When are contractors not required to pay the premium?
It is important to note that sub-contractors working for a principal contractor are not responsible for collecting or paying additional premiums for their work. This is covered by the policy taken out by the principal contractor.
The premium is also not payable for work being performed for an owner-builder who has a permit for the work. It is important to check both that the owner has a permit, and the permit covers the work in question, otherwise a premium is payable.
How do I work out the premium amount?
For contracts signed before 28 October 2016, the premium is based on the contract price. For contract signed on or after 28 October 2016, the premium is based on the insurable value of the work.
The term 'insurable value' is the amount which represents the reasonable cost of having the work carried out by a licensed contractor on the basis that all materials are to be supplied by the contractor - whether or not the work is carried out on this basis.
This Insurance Premium Table (PDF) shows the premium amounts (including GST) for contracts signed between 1 July 2016 and 28 October 2016. For contracts signed on or after 28 October 2016, please refer to either the:
- Insurance premium table - for new home constructions - from 28 October 2016
- Insurance premium table - for alterations, additions and swimming pools - from 28 October 2106.
Insuring multiple dwellings
In general, you must pay a premium for each individual residence being built, repaired or renovated.
To calculate the amount, divide the contract value by the number of units. Use the formula on page 2 of the Insurance Notification Form - for contracts signed before Oct 28 2016 (PDF) or Insurance Notification Form - for contracts signed on or after Oct 28 2016 (PDF).
However, please note that, in relation to the following work carried out for a body corporate on common property on a multiple dwelling, the insurance premium is based on the value of the work:
- Solid plastering
- Fire protection work
- Physical termite management work
Proof of payment
Once you have paid the premium we send you either a Certificate of Insurance (for contracts before 28 October 2016) or a Notice of Cover (for contracts signed on or after 28 October 2016). Examples of these documents are shown below. You’ll need to provide this document to your certifier for release of plans.
Before 28 October 2016
After 28 October 2016
The home owner will receive a Certificate of Home Warranty Insurance and policy booklet (for contracts before 28 October 2106) or a Notice of Cover and a link to our online Produce Disclosure booklet (for contracts on or after 28 October 2016).
If there are any errors, please contact us so that we can amend the documents.