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Homeowners who are left with incomplete or defective construction jobs are protected by mandatory home warranty insurance in many parts of Australia. This insurance is purchased by the builder doing the work and kicks in if they can't finish the job for a variety of reasons.
This type of insurance has many different names depending on the state, but we dive into what it is and how it works below.
Home warranty insurance functions largely the same way in both NSW and WA. The main difference is that it's called "home building compensation" in NSW and "home indemnity insurance" in WA. It has the following features:
Builders warranty insurance is known as "domestic building insurance" in Victoria. Here's how it works:
In Queensland, home warranty insurance works like this:
Home warranty insurance is mandatory in both the ACT and South Australia for building projects above $12,000, but not in Tasmania or the Northern Territory. It covers homeowners for incomplete construction and structural defects in a similar way to other states.
State | Minimum value of work | Length of cover for structural work | Length of cover for non-structural work | Minimum cover to be provided by insurer |
ACT | $12,000 | 6 years | $85,000 | |
NSW | $20,000 | 6 years | 2 years | $340,000 |
SA | $12,000 | 5 years | $150,000 | |
VIC | $16,000 | 6 years | 2 years | $300,000 |
WA | $20,000 | 6 years | $100,000 |
Home warranty insurance is designed to protect homeowners against incomplete building work and defects from construction in residential projects. It is taken out by the builders and tradespeople themselves and is mandatory in many states depending on the value of the build project. This kind of insurance has different names depending on what state you're in, such as builders warranty insurance, so see the above sections for state-by-state breakdowns.
Builders warranty insurance is purchased by the builder but is actually meant to protect the homeowner. It offers the following:
This insurance is only mandatory on residential building projects that exceed a certain threshold depending on the state. This threshold stretches from $3,300 in QLD to $20,000 in NSW and WA.
In theory, home warranty insurance is a nice idea, but it does come with some limitations that you should be aware of.
The process for purchasing home warranty insurance differs from state to state, although there are some similarities. In all states, you'll only be purchasing it if you're a builder or tradesperson doing residential building work.
Generally, you'll need to do the following:
State | What you need to do |
---|---|
New South Wales | All home building compensation insurance is purchasable from icare HBCF through an approved broker. You can find more info at the State Insurance Regulatory Authority. |
Western Australia | To access the process for getting your building work approved and insured, go through the government's Building and Energy website. |
South Australia | Building indemnity insurance has to be secured from one of the few approved insurers through your insurance broker. To see the process and list of insurers, see the South Australian Government Financing Authority's website on the matter. |
Victoria | Domestic building insurance is handled through the VMIA, which has a short approved list of authorised distributors. |
Queensland | To find out about purchasing home warranty insurance, see the Queensland Building and Construction Commission's page. |
Australian Capital Territory | For information on obtaining home warranty insurance in the ACT, visit the Environment, Planning and Sustainable Directorate site. |
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.
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