Home Warranty Insurance

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

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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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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 Building Cover Contents Cover Fire, Storm & Theft Damage Sum Insured Safeguard Online Discount Cheapest way to pay
Budget Direct Home & Contents Insurance
Optional
Annually
Save 30% on your first year's premium when you purchase a new combined Home & Contents insurance policy online. T&Cs apply.
Green Company
QBE Home & Contents Insurance
Annually
Save up to 20% on your first years’ premium with a new combined QBE Home and Contents policy online. T&Cs apply.
Virgin Home and Contents Insurance
Optional
Annually
Purchase a new eligible Virgin Home and Contents Insurance policy online and you'll also save 30% on your first year’s premium. T&Cs Apply.
Qantas Home and Contents Insurance
Optional
Annually
Earn up to 20,000 Qantas Points when you apply. Points awarded will be based on your premium. T&Cs & exclusions apply.
Huddle Comprehensive Home and Contents Insurance
Annually
Save up to 20% on your policy in the first year.
Domain Home Buildings & Contents Insurance
Monthly or Annually
Domain Insure uses property data to help build your quote faster.
Seniors Top Home & Contents Insurance
Annually
Buy online and save up to 30% on a new home and contents insurance policy. T&Cs apply.
Real Top Home and Contents Insurance
Annually
Save up to 20% when you purchase combined Home and Contents online.
Youi Building and Contents Insurance
Annually
Youi Home Insurance takes the time to tailor a premium for you.
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Frequently asked questions about home warranty insurance

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