Builders insurance: business cover and home warranty insurance by state
Builders insurance means two different things. For a builder, it's the business cover the trade needs: public liability, contract works, tools and workers compensation. For a homeowner, it usually means home warranty insurance, the cover a licensed builder must take out before starting residential work above a set value in most states: the Home Building Compensation Fund (HBCF) in NSW, the Home Warranty Scheme in Victoria, the QBCC Home Warranty Scheme in Queensland, Home Indemnity Insurance in WA and Building Indemnity Insurance in South Australia.
This page covers both. The table below shows each state's home warranty threshold, what triggers a claim, how long the cover lasts and the maximum it pays, all from the state's own regulator or scheme, followed by the business covers builders usually hold and the licence rules that sit beside them.
By Better Rate Mate Editorial Team ยท Last reviewed
Home warranty insurance by state
Home warranty insurance protects the homeowner. It pays to finish or fix residential building work, or refunds a lost deposit, when the builder can't, and the builder must arrange it, in the owner's name, before starting work or taking payment. In most states it's a last resort: it pays only if the builder dies, disappears or becomes insolvent, or in NSW and WA loses their licence or registration in set circumstances. Victoria's new scheme, for contracts signed from 1 July 2026, is the exception: homeowners can claim when a problem is first identified.
| State | Scheme | When it's required | What triggers a claim | How long cover lasts | Maximum |
|---|---|---|---|---|---|
| NSW | Home Building Compensation Fund (HBCF), run by icare | Residential building work over $20,000 including GST. Cover must be in place before the builder starts work or takes any payment, including a deposit | Last resort: the builder dies, becomes insolvent, disappears, or has their licence suspended for not complying with a court or NCAT order to pay you | Major defects 6 years and other defects 2 years from completion; incomplete work claimed within 12 months of the work stopping | $340,000 per dwelling ($300,000 for policies before 1 February 2012); incomplete work up to 20% of the contract price |
| VIC | Home Warranty Scheme, run by the Building and Plumbing Commission, for contracts signed from 1 July 2026 (Domestic Building Insurance before that) | Domestic building contracts over $20,000 on buildings of 3 storeys or less | First resort: claim when a building issue is first identified, including lost deposits, incomplete work and defective or non-compliant work | Major defects (structural, waterproofing, weatherproofing) 6 years and other defects 2 years from completion | $400,000 per home; incomplete work up to 30% of the contract price |
| QLD | Queensland Home Warranty Scheme, run by the QBCC | Residential construction work over $3,300 including labour, materials and GST. The contractor collects the premium and pays it before work starts or within 10 business days of signing, whichever is earlier | Non-completion (the contract ends within 2 years; claim within 3 months), structural and non-structural defects, and subsidence | 6 years 6 months. Structural defects noticed in that time (claim within 3 months); non-structural defects noticed within 6 months of completion (claim within 7 months) | $200,000 for each category of loss, or $300,000 with optional additional cover |
| WA | Home Indemnity Insurance (HII), regulated by Building and Energy | Residential building work needing a building permit and valued over $20,000. The builder takes it out in the owner's name before taking payment or starting work | The builder dies, disappears or becomes insolvent, or loses their registration for failing the financial requirements | During construction and 6 years from practical completion | Lost deposit up to $40,000; incomplete or defective work up to $200,000 |
| SA | Building Indemnity Insurance (BII), underwritten through the South Australian Government Financing Authority | Building work needing development approval and valued at $20,000 or more (from 10 November 2025) | The builder dies, disappears or becomes insolvent before the work is finished or defects are fixed | Defect claims up to 5 years after the work is finished | $250,000 on current policies (lower limits on older policies) |
Home warranty in the ACT, Tasmania and the NT
The territories and Tasmania handle it differently:
- ACT: building work on houses and apartment buildings of three storeys and below, other than a car park, must be covered by residential building work insurance. QBE is currently the only authorised insurer, and the Master Builders Fidelity Fund is the only approved fidelity fund. From 1 January 2025 the minimum insurance amount rose from $85,000 to $200,000 and the time to lodge a claim from 90 to 180 days.
- NT: owners of new homes must have residential building cover through a fidelity fund certificate. On 30 March 2026 the value of work that triggers the need for a certificate rose from $12,000 to $25,000. It covers non-structural defects for a year and structural defects for six years after completion if the builder becomes bankrupt, dies, disappears or has their registration cancelled.
- Tasmania has no compulsory home warranty insurance. Its Financial Assistance Package pays up to $200,000 to consumers whose builder died, disappeared or entered voluntary administration since 1 July 2021, while the government develops a home warranty model.
What home warranty insurance doesn't do
It isn't the builder's insurance. It protects the homeowner, and later owners, if the builder can't finish or fix the work. It doesn't cover the builder's own liability, tools or staff. icare also points out that HBCF isn't like regular home insurance: it doesn't cover everyday building disputes, minor problems while your builder is still trading, or maintenance and wear and tear.
In the last-resort states it doesn't pay while the builder is still trading. If your builder is still trading, icare says you usually need to try other options first, such as resolving the issue with them directly or through dispute resolution. The cover also stays with the property: icare says it protects you and anyone you sell your home to, and WA's cover protects later owners too.
Insurance a builder needs for the business
A building business needs its own cover alongside any home warranty policy. The mix depends on the work you take on and whether you employ anyone:
| Cover | What it pays for | Compulsory? |
|---|---|---|
| Public liability | Injury to other people and damage to their property caused by your work | Usually a contract or site condition; required by law only for some occupations in some states |
| Contract works | Damage to the building work itself during construction | Sometimes a contract condition |
| Home warranty | Protects the homeowner if you can't finish or fix residential work | Yes, for residential work above each state's threshold |
| Workers compensation | Your workers' wages and medical costs after a work injury, including apprentices | Yes, once you employ workers |
| Tools and equipment | Theft of or damage to tools and portable equipment | No |
| Commercial motor and CTP | Damage to work vehicles; CTP covers injury to people | CTP is compulsory with registration |
| Professional indemnity | Claims that your design, advice or certification caused a loss | For some building practitioners, such as registered design practitioners in NSW |
| Personal accident and illness or income protection | A benefit for you if injury or illness stops you working | No; workers comp doesn't cover a sole trader |
Builder licences by state
Licensing sits beside home warranty insurance, and the thresholds are lower. These are the values above which residential building work needs a licence or registration, from each regulator:
- NSW: a contractor licence for residential building work over $5,000 including GST, and for all electrical wiring, plumbing, drainage, gasfitting, air conditioning and refrigeration work (Building Commission NSW).
- Victoria: registration with the Building and Plumbing Commission for domestic building work worth more than $10,000, and for re-blocking, re-stumping, demolition, removing a home or any work needing a permit, whatever the cost (Consumer Affairs Victoria).
- Queensland: a QBCC licence for building work valued over $3,300, and for plumbing, drainage and gas fitting of any value.
- WA: a registered builder for most building work valued at $20,000 or more that needs a building permit. From 1 July 2026, Class 10a buildings such as sheds, carports and garages under $50,000 don't need a registered builder.
How much is builder's insurance?
There's no standard price for the business covers. Insurers rate a building business on the work it does (residential or commercial, new builds or renovations, heights and depths), its turnover and contract values, the limits it chooses, its claims history and its excess. Compare quotes with the same limits and the same description of your work.
Home warranty premiums are set by each scheme. icare says the cost of HBCF depends on the type and value of the work and your builder profile, including your experience and claims history, and you need an active certificate of eligibility before you can get cover for a job. In Queensland the premium is based on the insurable value of the work and is included in the contract price. In WA the builder pays the premium and builds it into the contract price.
What to watch for
- Homeowners: ask for the home warranty certificate before you pay a deposit. In NSW and WA the cover must be in place before the builder takes any payment or starts work.
- Builders: get the certificate of insurance for each job before you start, and build the premium into your quote.
- In Victoria, check which scheme applies: contracts signed from 1 July 2026 come under the Home Warranty Scheme, and earlier Domestic Building Insurance policies stay with the insurer that issued them.
- Don't confuse home warranty insurance with your own cover. Builders still need public liability, contract works and workers compensation.
- Keep the certificate with your property documents. The cover protects later owners if you sell.
Common questions
What insurance do I need as a builder?
Most builders hold public liability, contract works cover for the job, tools and equipment cover, workers compensation once they employ anyone, and commercial motor cover. For residential work above each state's threshold you must also arrange home warranty insurance for the homeowner before you start. Builders who design or certify work may also need professional indemnity.
What is home warranty insurance?
It's insurance a licensed builder takes out for the homeowner on residential building work above a set value. It pays to complete or fix the work, or refunds a deposit, when the builder can't. In most states it only pays if the builder dies, disappears or becomes insolvent; Victoria's scheme for contracts from 1 July 2026 lets owners claim when a problem is first identified.
How much is builder's insurance per year?
It depends on the work you do, your turnover and contract values, the limits and excess you choose and your claims history, so there's no standard price. Home warranty premiums are charged per job by each state's scheme; in NSW they depend on the type and value of the work and your builder profile.
Is builders warranty 10 years?
Not usually. In NSW the statutory warranties run for 6 years for major defects and 2 years for other defects. Home warranty cover lasts 6 years for major defects in NSW and Victoria, 6 years 6 months in Queensland, 6 years in WA and 5 years in South Australia. For an owner-built home sold in Victoria, the Building and Plumbing Commission says it may direct rectification of significant defects for 10 years after completion.
Do you need home warranty insurance as an owner builder?
It depends on the state. In Queensland owner-builders can't access the home warranty scheme and must tell a buyer in writing if they sell within 6 years. In Victoria an owner-builder who sells within 6 years and 6 months must buy home warranty cover for work over $20,000 and include it in the sale documents. In South Australia owner-builders can't take out building indemnity insurance themselves, and in the NT they need a fidelity fund certificate that covers future owners.
How long does a builder have to fix defects after handover?
It depends on the state and the defect. In NSW, proceedings for a breach of statutory warranty must start within 6 years of completion for a major defect and 2 years for other defects, with 6 extra months if the defect appears in the last 6 months. Queensland's home warranty covers structural defects noticed within 6 years 6 months and non-structural defects noticed within 6 months of completion.
Who pays for home warranty insurance?
The builder arranges and pays for it, and the cost is usually built into the contract price. In Queensland the licensed contractor collects the premium from the homeowner and pays it to the QBCC on their behalf.
General information only
This page summarises each state's home warranty scheme and the covers builders commonly hold. It isn't legal or insurance advice. Scheme rules change, so check the current rules with your state's building regulator or scheme before you sign a contract, and read the policy wording for any business cover.
