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Home Warranty Insurance

The builder usually pays for home warranty insurance, but it doesn't always protect you for unfinished jobs.

Homeowners who are left with incomplete or defective construction jobs may be protected by mandatory home warranty insurance in many parts of Australia – but only if the builder has gone missing, passed away, become insolvent or lost their licence.

This type of insurance is purchased by the builder doing the work and has many different names depending on the state you live in.

What is home warranty insurance?

Home warranty insurance is designed to protect homeowners against incomplete building work and defects from construction in residential projects but it only covers you in specific situations. For example, if your builder:

  • Goes missing
  • Dies
  • Becomes insolvent
  • Loses their license

It's taken out by the builders and tradespeople themselves but is only mandatory when the build project reaches a certain value. This differs between states, as does what it's called.

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Home warranty insurance in NSW and WA

Home warranty insurance functions largely the same way in both NSW and WA. The main difference is that it's often called "home building compensation" in NSW and "home indemnity insurance" in WA. It can cover you for the completion of building work or fixing defects but only if:

  • The builder is unable to finish the work due to death, financial insolvency or disappearance within six years of finishing the contract.
  • Any builder or tradesperson is required to take out this insurance for each building project over $20,000. Sub-contractors are covered by the head contractor's cover.


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Finder survey: Do Australians think home insurance is worth it?

ResponseGen ZGen YGen XBaby Boomers
Yes55.06%70.38%65.46%72.16%
No24.72%17.12%18.09%17.33%
I don't know20.22%12.5%16.45%10.51%
Source: Finder survey by Pure Profile of 1113 Australians, December 2023

Builders warranty insurance in Victoria

Builders warranty insurance is known as "domestic building insurance" in Victoria. It can cover homeowners plus subsequent owners for incomplete or defective building work.

  • Applies if the builder cannot finish due to death, disappearance, financial insolvency within six years of completing the contract, or if the builder fails to comply with a court order to repair substandard work (applicable to contracts signed after 1 July 2015).
  • Builders are only required to take out this insurance for each building project over $16,000.

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Home warranty insurance in QLD

In Queensland, home warranty insurance can cover the homeowner for incomplete construction work, defects and subsidence or settlement but:

  • You must make a claim within three months of noticing the defect for structural issues and within seven months of contract completion for non-structural defects.
  • Builders are required to take out this insurance for most residential projects valued above $3,300.

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Home warranty insurance in other states like ACT, SA and TAS

Home warranty insurance is mandatory in South Australia, the ACT and the Northern Territories for projects above $12,000 but not in Tasmania. It covers homeowners for incomplete construction and structural defects in a similar way to other states. It can apply if

  • The work has not been completed or faulty work has not been fixed and the builder dies, disappears or is declared bankrupt.
  • Builders are required to take out this insurance for most residential projects valued above $12,000.

Summary of the facts

StateMinimum value of workLength of cover for structural workLength of cover for non-structural workMinimum cover to be provided by insurer
ACT$12,0006 years$85,000
NSW$20,0006 years2 years$340,000
SA$12,0005 years$150,000
VIC$16,0006 years2 years$300,000
WA$20,0006 years$100,000

Pros and cons of home warranty insurance

Pros

  • It can sometimes cover incomplete or defective building work.
  • It can be an effective "last resort" system, where you can claim only if the builder doesn't complete the work due to death, disappearance or financial insolvency.

Cons

  • It's only mandatory on residential building projects that exceed a certain threshold depending on the state.
  • It doesn't protect you from dishonest builders (you generally won't be covered if a builder refuses to repair their work or give you a refund.)
  • In-built cap regardless of the building project (you'll only be covered for a maximum of 20% of the contract price).
  • It won't cover commercial buildings.

Is it time to look at your home insurance?

Whether you're buying your first home insurance policy or looking to switch from your existing one, it always pays to compare. You can choose up to four policies at a time, select "Compare" and view the benefits side-by-side to make sure you get the right cover.

Name Product Finder score
Youi Building and Contents Insurance
4.5/5★★★★★
Best Rated Brand
Storm
Fire
Theft
Flood
Accidental Damage (e.g TV falls)
Impact to home (e.g falling trees)
Escaped water (e.g burst pipe)
Portable contents (e.g dropped laptop outside of home)
+ more insured events and other features
Storm
Fire
Theft
Flood
Accidental Damage (e.g TV falls)
Impact to home (e.g falling trees)
Escaped water (e.g burst pipe)
Portable contents (e.g dropped laptop outside of home)
+ more insured events and other features
4.5/5★★★★★
Our verdict: Finder’s 2022 Insurer of the Year for Customer Satisfaction and our Top Pick for Fire Damage cover. It’s good if you want a tailored quote over the phone.
Budget Direct Home & Contents Insurance
4.5/5★★★★★
BonusFinder Award Finalist
Storm
Fire
Theft
Flood
Accidental Damage (e.g TV falls)
Impact to home (e.g falling trees)
Escaped water (e.g burst pipe)
Portable contents (e.g dropped laptop outside of home)
+ more insured events and other features
Storm
Fire
Theft
Flood
Accidental Damage (e.g TV falls)
Impact to home (e.g falling trees)
Escaped water (e.g burst pipe)
Portable contents (e.g dropped laptop outside of home)
+ more insured events and other features
4.5/5★★★★★
Our verdict: The most popular insurer on Finder, Budget Direct prioritises low-cost cover and gives you up to 30% off your first year for new combined policies purchased online.
QBE Home & Contents Insurance
3.5/5★★★★★
Green CompanyBonus
Storm
Fire
Theft
Flood
Accidental Damage (e.g TV falls)
Impact to home (e.g falling trees)
Escaped water (e.g burst pipe)
Portable contents (e.g dropped laptop outside of home)
+ more insured events and other features
Storm
Fire
Theft
Flood
Accidental Damage (e.g TV falls)
Impact to home (e.g falling trees)
Escaped water (e.g burst pipe)
Portable contents (e.g dropped laptop outside of home)
+ more insured events and other features
3.5/5★★★★★
Our verdict: Finder's Top Pick for Floods plus cover for other common claims such as fire and theft). Its discount is better than most – 20% off your first year with a combined policy.
Honey Home & Contents Insurance
4.5/5★★★★★
Bonus
Storm
Fire
Theft
Flood
Accidental Damage (e.g TV falls)
Impact to home (e.g falling trees)
Escaped water (e.g burst pipe)
Portable contents (e.g dropped laptop outside of home)
+ more insured events and other features
Storm
Fire
Theft
Flood
Accidental Damage (e.g TV falls)
Impact to home (e.g falling trees)
Escaped water (e.g burst pipe)
Portable contents (e.g dropped laptop outside of home)
+ more insured events and other features
4.5/5★★★★★
Our verdict: Honey gives you $250 smart sensors to reduce accidents and estimates your rebuild costs for you. Honey was a finalist for the comprehensive category in this year’s Finder Awards.
Australia Post Home & Contents Insurance
3.5/5★★★★★
Finder AwardBonus
Storm
Fire
Theft
Flood
Accidental Damage (e.g TV falls)
Impact to home (e.g falling trees)
Escaped water (e.g burst pipe)
Portable contents (e.g dropped laptop outside of home)
+ more insured events and other features
Storm
Fire
Theft
Flood
Accidental Damage (e.g TV falls)
Impact to home (e.g falling trees)
Escaped water (e.g burst pipe)
Portable contents (e.g dropped laptop outside of home)
+ more insured events and other features
3.5/5★★★★★
Our verdict: Covers common claims such as fire, storms, floods and rain. It’s also very helpful if you need to rebuild following a disaster. It offers a special safeguard of up to 30%.
Kogan Home & Contents Insurance
3/5★★★★★
Bonus
Storm
Fire
Theft
Flood
Accidental Damage (e.g TV falls)
Impact to home (e.g falling trees)
Escaped water (e.g burst pipe)
Portable contents (e.g dropped laptop outside of home)
+ more insured events and other features
Storm
Fire
Theft
Flood
Accidental Damage (e.g TV falls)
Impact to home (e.g falling trees)
Escaped water (e.g burst pipe)
Portable contents (e.g dropped laptop outside of home)
+ more insured events and other features
3/5★★★★★
Our verdict: Good comprehensive cover (issued by QBE). Also, get 16% off on your first year's premium when you purchase a new combined Home & Contents insurance policy online + $10 monthly credit. T&Cs apply.
Qantas Home and Contents Insurance
4.5/5★★★★★
BonusFinder Award Finalist
Storm
Fire
Theft
Flood
Accidental Damage (e.g TV falls)
Impact to home (e.g falling trees)
Escaped water (e.g burst pipe)
Portable contents (e.g dropped laptop outside of home)
+ more insured events and other features
Storm
Fire
Theft
Flood
Accidental Damage (e.g TV falls)
Impact to home (e.g falling trees)
Escaped water (e.g burst pipe)
Portable contents (e.g dropped laptop outside of home)
+ more insured events and other features
4.5/5★★★★★
Our verdict: Earn up to 30K Qantas Points for joining by 30 September. Plus save 30% on your 1st year’s premium for purchasing a combined home and contents policy online. T&Cs apply.
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Frequently asked questions about home warranty insurance

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Editor, Insurance & Innovations

Gary Ross Hunter was an editor at Finder, specialising in insurance. He’s been writing about life, travel, home, car, pet and health insurance for over 6 years and regularly appears as an insurance expert in publications including The Sydney Morning Herald, The Guardian and news.com.au. Gary holds a Kaplan Tier 2 General Advice General Insurance certification which meets the requirements of ASIC Regulatory Guide 146 (RG146). See full bio

Gary Ross's expertise
Gary Ross has written 730 Finder guides across topics including:
  • Health, home, life, car, pet and travel insurance
  • Managing the cost of living

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