What is home warranty insurance | Queensland Building and Construction Commission

SEQ flood recovery — tips for rebuilding and tradie register.

Image

When you embark on a building or renovation project, your contractor pays a premium to us to insure the work. The premium amount is:

  • collected from you and paid to us by the contractor
  • included as part of your contract
  • paid before work begins
  • compulsory for all residential construction work valued at more than $3,300 (including cost of materials, labour and GST).

What the insurance covers

Home warranty insurance only applies to residential construction work.

This insurance covers the home owner for loss if something goes wrong during the building process. Within a certain time period you can make a claim:

  • if your contractor does not, or can not, finish the work you contracted them to do (a non-completion claim)
    • if we have accepted your claim for non-completion of work and your building project is damaged by:
      • fire
      • storm
      • vandalism
      • theft
  • if your contractor does not fix defects (a defective work claim)
  • if the building suffers from subsidence or settlement.

Once we pay out on a claim, we try to recover the amount we have paid to finish or fix the work from the contractor.

Home warranty insurance pays up to a maximum of $200,000 on claims. Claims are subject to certain limitations and some exclusions apply.

Types of contracts we insure

Fixed-price contracts can be covered for:

  • non-completion claims
  • defective works claims.

Cost-plus contracts can only be covered for:

  • defective works claims.

This is because to settle a non-completion claim we need to know how much you agreed to pay to finish the work under your contract. Cost-plus contracts have no certainty about the final price, so we won't be able to quantify if you have suffered any losses.

Home warranty insurance in brief

Many home owners get confused about home warranty insurance. It is different to regular insurance, such as home and contents insurance, because it:

  • covers the building process so you can claim if the project is not finished or has defects
  • is compulsory for residential building projects valued at more than $3,300 (including material, labour and GST)
  • is paid as part of your building or renovation contract
  • is administered by the Queensland government through the QBCC
  • lasts for 6 years and 6 months
  • covers the property, so the insurance remains if the home is sold
  • can not be transferred between contractors
  • has to be claimed within certain timeframes, which depend on the type of claim
  • has limits on the maximum amount that can be paid
  • is affected if you pay your contractor more than is allowed by law or under your contract
  • can't be renewed once the cover expires
  • does not cover commercial building projects
  • is not home and contents insurance.

Insurance search when buying a home

If you are buying a home, you or your legal agent can search to see if any home warranty insurance is attached to the property.

This cover lasts for 6 years and 6 months from when the contract is entered into or the premium is paid (whichever is the earlier), though it can be extended if the construction took more than six months to complete.

It may help you with any defects that develop after you move in.

Know the rules when hiring a builder

Check your quote

Contractors must include the cost of taking out insurance through the Home Warranty Scheme or they face significant penalties. If your project will cost more than $3,300 (including labour, material and GST), make sure the home warranty insurance premium is included in each quote so you can compare accurately.

Check your contract

Only use fixed-price contracts. You can only make a non-completion claim for a residential building projects under the Home Warranty Scheme if you have a fixed-price contract with a licensed contractor. That is because we need to know the final cost of the work. 


Last reviewed: 27 Sep 2021 Last published: 27 Sep 2021
Back to top