What is Home Building Compensation?
Home Building Compensation (‘HBC) cover (formerly known as Home Warranty Insurance) is a mandatory insurance scheme for builders and contractors.
HBC cover protects homeowners from incomplete or defective building work in the event of a builder or tradespersons:
- disappearance
- death
- insolvency or;
- licence suspension by NSW Fair Trading.
Who requires Home Building Compensation insurance?
Any builder or contractor undertaking a residential construction or renovation project exceeding $20,000 (incl GST) must obtain HBC cover. In line with Home Building Act 1989 (NSW) s 92 (‘Home Building Act’), a certificate of insurance must be provided to the homeowner before any money is deposited or work has begun.
If your home has defective or incomplete building work, it is important to know how you can claim on your HBC insurance.
What does Home Building Compensation cover?
Depending on the circumstances, your HBC cover will provide insurance in the event of:
- failure to commence work (claimable for up to 12 months from the date of failure to commence)
- failure to complete the contracted work (claimable for up to 12 months from date of cessation of work worth up to 20% of the contract price)
- major defects (claimable for up to 6 years from the project’s completion for the cost of repair)
- non-major defects (claimable for up to 2 years from the project’s completion for the cost of repair).
The Home Building Compensation Fund
In NSW, HBC insurance is offered by a corporation known as Insurance and Care NSW (‘icare’) who are the sole provider of the Home Building Compensation Fund (‘HBCF’).
The HBCF requires all licenced builders and contractors to complete a risk-based eligibility assessment to qualify for a certificate of insurance.
If you have suffered loss or damage and have valid HBC cover, you should make a claim.
Making a Home Building Compensation Claim
In accordance with Home Building Act s 18BA, you must make a reasonable effort to notify your HBC provider when you have incurred loss or damage.
When making a home building compensation claim relating to defective or incomplete work, the following information should be provided in your claim application:
- Details of the property
- The certificate of insurance and building contract
- A description of the building work alleged to be defective or incomplete
- Evidence that you have attempted to settle the dispute with your builder or tradesperson.
Additional information that can aid the assessment of your claim include: plans, building inspection reports, correspondence, invoices and photo documentation.
It is also important to make sure that you are lodging your claim within your HBC providers’ policy insurance period.
Once a claim has been lodged, your insurance provider will review the information provided and assess what the policy can cover. A determination letter will be sent including decisions on each of the items you claimed.
To learn more about making a claim under a policy issued by the HBCF, please refer to the icare website.
Disputing a claim decision
If you are not satisfied with the claim decision, you can appeal to the NSW Civil and Administrative Tribunal (NCAT). NCAT can make orders for compensation or grant a greater share of compensation than what was initially awarded.
Alternatively, if you are unhappy with how your claim was handled, you can request the State Insurance Regulatory Authority (SIRA) to conduct a regulatory compliance review. SIRA will assess whether icare (or its brokers) have correctly followed the Home Building Act, the Home Building Regulation 2014 (NSW), or the HBC insurance guidelines.
To learn more about resolving construction disputes with builders, architects, subcontractors and swimming pool builders, please visit our website.
Contact Us
If you have suffered loss or damage during a home building or renovation project, we recommend seeking independent legal advice.
If you would like to discuss your home building compensation matter with an experienced solicitor, please contact Etheringtons Solicitors on (02) 9963 9800 or via our online contact form.