If you are renovating, extending or building a home in NSW, you will hear about home building compensation insurance, often called builders warranty insurance or HBCF cover. It protects homeowners if things go seriously wrong with the builder.
What it is
Home building compensation cover is provided through the NSW Government's Home Building Compensation Fund, administered by icare. It is a "last resort" cover: it pays for incomplete or defective work when the builder cannot be pursued.
When it is required
In NSW, licensed builders must take out home building compensation cover for residential building work where the contract price is over $20,000, including GST. The builder must give you the certificate of insurance before taking a deposit or starting work. Some types of work, including certain multi-storey residential buildings, are exempt.
When you can claim
Because it is last resort cover, you can generally only claim if the builder has:
- died or disappeared,
- become insolvent, or
- had their licence suspended for failing to comply with a court or tribunal order to pay you.
What it covers
Cover relates to defective and incomplete work, within time limits. These broadly line up with the statutory warranties under the Home Building Act 1989: six years for major defects and two years for other defects, with separate time limits for non-completion. Check your certificate and icare's information for the details that apply to your job.
How to check your builder
- Ask for the HBCF certificate before paying any deposit.
- Check the certificate matches your address, the builder's name and the contract.
- Verify it with icare's online certificate check.
- Check the builder's licence on the NSW Government licence check.
HBCF is not a substitute for a good builder
The statutory warranties apply to licensed builders regardless of insurance, and most defects are resolved directly with the builder. Choosing a licensed, experienced builder with clear contracts and documentation is still the best protection. See why hire a fully insured builder.
Licensed and insured
METCON holds NSW Builder Licence 384697C, $20M public liability and HBCF cover where required. See our residential services or call 0415 840 500.
Frequently asked questions
When is HBCF insurance required in NSW?
For residential building work by a licensed builder where the contract price is over $20,000 including GST, with some exemptions such as certain multi-storey buildings.
Can I claim on HBCF if my builder does poor work?
Generally only if the builder has died, disappeared, become insolvent or had their licence suspended for not paying a court or tribunal order. Otherwise, defects are pursued with the builder.
How do I check my builder has HBCF cover?
Ask for the certificate before paying a deposit and verify it using icare's online certificate check.
