Home Warranty Insurance NSW Exemptions

Home Warranty Insurance NSW Exemptions

Are you a homeowner in New South Wales (NSW), Australia, looking for home warranty insurance? It’s important to know that there are certain exemptions to this type of insurance that you should be aware of. Home warranty insurance is a form of protection for homeowners against defective building work, but not all types of construction projects are covered by it. In this article, we will explore the exemptions to home warranty insurance in NSW and help you understand when and why you may need it.

Understanding Home Warranty Insurance Requirements in NSW

Home Warranty Insurance is a mandatory insurance policy required by the NSW government for residential building work contracts over $20,000. This insurance provides protection to homeowners against incomplete or defective work, as well as loss of deposit or non-completion of the work due to the builder’s insolvency.


Some residential building work contracts are exempt from requiring Home Warranty Insurance, such as:

  • Contracts for work on buildings over three storeys high
  • Contracts for work on buildings that are not primarily residential, such as commercial buildings
  • Contracts for work on buildings that are already covered by Home Warranty Insurance
  • Contracts for work on buildings that are owned by the government or local council
  • Contracts for work on buildings that are being sold within 6 years of the completion of the work


If your residential building work contract requires Home Warranty Insurance, the builder must obtain the policy and provide you with a certificate of insurance before starting any work. The insurance policy must cover the homeowner for six years from the completion of the work for structural defects, and two years for non-structural defects.

The insurance premium for Home Warranty Insurance is paid by the builder and is included in the total cost of the building work. The cost of the insurance varies depending on the value of the contract, and the type of work being done.

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If you need to make a claim on your Home Warranty Insurance policy, you should contact the insurance provider as soon as possible. The provider will assess the claim and determine if it is covered by the policy. If the claim is accepted, the insurance provider will either arrange for the work to be completed or provide a payout to the homeowner to cover the cost of the work.

It is important to note that Home Warranty Insurance does not cover general wear and tear or damage caused by the homeowner. It only covers defects in the workmanship of the builder.

Understanding the requirements and exemptions of Home Warranty Insurance in NSW is crucial for homeowners undertaking residential building work contracts. By ensuring that your builder has obtained the necessary insurance policy, you can have peace of mind knowing that you are protected against incomplete or defective work.

Unpacking HBC Cover: Who is Responsible for Payment?

Unpacking HBC Cover: Who is Responsible for Payment? It is important to understand the responsibilities of each party involved when it comes to Home Building Compensation (HBC) cover. HBC is a type of insurance that provides protection to homeowners against losses that may arise from incomplete or defective building work.

What is HBC cover?

HBC cover is mandatory in New South Wales for residential building work that exceeds $20,000 in value. It provides protection for homeowners against losses resulting from incomplete or defective building work, as well as protection for subcontractors and suppliers who have not been paid for their work or materials.

Who is responsible for payment?

When it comes to HBC cover, there are two parties responsible for payment:

The Builder

The builder is responsible for paying the premium for HBC cover. This cost is usually included in the overall cost of the building work and is paid for by the homeowner. The builder must provide evidence of HBC cover before commencing any work on the property.

The Homeowner

The homeowner is responsible for paying any excess that may be required in the event of a claim. The excess is usually a fixed amount and is agreed upon before the policy is taken out. It is important to note that the excess is only payable if a claim is made and is not an additional cost that the homeowner must pay upfront.

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What happens if a builder does not have HBC cover?

If a builder does not have HBC cover, they are breaking the law and can face significant penalties. If the builder is unable to complete the building work or is declared bankrupt, the homeowner may be entitled to make a claim under the HBC scheme. In this case, the homeowner would be responsible for paying the excess and any other costs associated with the claim.

Understanding Builder’s Warranty Coverage: What’s In and What’s Out

Builder’s Warranty Coverage is a type of insurance policy that protects homeowners from financial loss due to defects in their newly constructed or renovated home. It is a mandatory requirement in most states in Australia, including New South Wales, for all builders to provide this type of coverage for their clients.

What’s Covered?

  • Structural Defects: This includes defects in the foundation, roof, walls, and other load-bearing components of the house.
  • Non-Structural Defects: This covers defects in non-load-bearing components of the house, such as doors, windows, and flooring.
  • Workmanship: This includes defects caused by poor workmanship or negligence on the part of the builder.
  • Materials: This covers defects caused by faulty or defective materials used in the construction or renovation of the house.

What’s NOT Covered?

  • General Wear and Tear: Builder’s Warranty Coverage only applies to defects that occur as a result of faulty workmanship or materials. It does not cover normal wear and tear that occurs over time.
  • Damage Caused by the Homeowner: Builder’s Warranty Coverage does not cover any damage caused by the homeowner, such as neglect or misuse of the property.
  • Acts of Nature: This includes damage caused by natural disasters such as floods, earthquakes, and storms. It is important to note that some insurance policies may offer coverage for these types of events, but it is not typically included in Builder’s Warranty Coverage.
  • Pre-Existing Conditions: Builder’s Warranty Coverage only applies to defects that occur after the completion of the construction or renovation project. It does not cover pre-existing conditions or defects that were present before the work was done.

It is important to read your Builder’s Warranty Coverage policy carefully to understand what is and is not covered. If you have any questions or concerns, it is recommended that you speak with an insurance expert or your builder to clarify any ambiguities.

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Understanding HBCF: Do You Really Need It?

When it comes to building or renovating a home in New South Wales, one of the most important things to consider is Home Building Compensation Fund (HBCF) insurance. HBCF insurance is designed to protect homeowners from financial loss if their builder cannot complete the work or fix any defects that arise after the work is finished. But do you really need it? Let’s take a closer look.

What is HBCF insurance?

HBCF insurance is a type of home warranty insurance that provides protection to homeowners in New South Wales. It is a mandatory requirement for builders and developers who undertake residential building work where the contract price is over $20,000. The insurance covers homeowners for six years from the date the work is completed, and it provides protection against non-completion, defective work, and other breaches of the building contract.

Exemptions from HBCF insurance

While HBCF insurance is mandatory for most residential building work over $20,000, there are some exemptions. For example:

  • Owner-builders who are building or renovating their own home are exempt from HBCF insurance.
  • Builders who are carrying out work on their own homes are exempt from HBCF insurance.
  • Renovations or extensions to existing buildings that do not involve structural work are exempt from HBCF insurance.

Do you really need HBCF insurance?

If you are having residential building work done in NSW and the contract price is over $20,000, then HBCF insurance is mandatory. So, in that sense, you do need it. However, even if you are not required by law to have HBCF insurance, it is still a good idea to consider it. Building work can be complex and unpredictable, and there is always a risk that something could go wrong. HBCF insurance provides peace of mind and financial protection in case something does go wrong.

As a final tip, it’s essential to thoroughly read and understand your home warranty insurance policy to avoid any surprises when it comes to exemptions. Ensure that you ask your insurer any questions you may have and clarify any doubts you may have before signing the policy. Remember, prevention is better than cure, so always be prepared and stay protected. Thank you for taking the time to read this article, and I hope you found it informative and helpful. If you have any further inquiries, please don’t hesitate to contact us.

If you found this article informative and engaging, be sure to visit our Homeowners insurance section for more insightful articles like this one. Whether you’re a seasoned insurance enthusiast or just beginning to delve into the topic, there’s always something new to discover in topbrokerstrade.com. See you there!

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