Home warranty insurance
Home warranty insurance is the umbrella term for state-administered residential build insurance: HBCF (NSW), DBI (VIC), QBCC (QLD). Each covers different scope.
Ask Chalkline about this →Home warranty insurance (HWI) is the umbrella term for the state-administered residential build insurance schemes that protect homeowners against incomplete or defective work where the licensed builder cannot rectify (typically through insolvency, death, disappearance, or licence suspension). Each state runs its own scheme; structures and coverage differ but the last-resort consumer protection function is consistent.
State schemes:
| State | Scheme name | Administrator | Threshold |
|---|---|---|---|
| NSW | Home Building Compensation Fund (HBCF) | icare | $20,000+ contracts |
| VIC | Domestic Building Insurance (DBI) | VMIA (Victorian Managed Insurance Authority) | $16,000+ contracts |
| QLD | Queensland Home Warranty Scheme (QHWS) | QBCC (Queensland Building and Construction Commission) | $3,300+ contracts |
| SA | Building Indemnity Insurance | Approved insurers under regulation | $12,000+ contracts |
| WA | Home Indemnity Insurance | Approved insurers under regulation | $20,000+ contracts |
| TAS | Domestic Builders Warranty | Private market only | Variable by contract |
| ACT | Builders’ warranty | Private market | Required for residential building licence |
| NT | Residential Building Cover Insurance | NT Build | Required for residential builders |
What home warranty insurance typically covers:
- Builder failure to start: deposit recovery if the builder fails to commence work after taking the deposit.
- Failure to complete: cost to complete the build if the builder cannot finish.
- Failure to rectify defects: cost of rectifying major defects in the contractually-guaranteed period (typically 6 years structural, 2 years non-structural).
- Loss of deposit in some jurisdictions where the failure is severe.
What it does NOT cover (each scheme has exclusions; check the specific PDS):
- Builder-client disputes that don’t involve failure / insolvency: the scheme is last-resort.
- Cosmetic defects outside the major-defect definition.
- Owner-builder failures: owner-builders are not covered as builders.
- Pre-existing defects in the lot or in unrelated existing buildings.
- Wear and tear, owner-caused damage, or natural disasters (those are house and contents).
Who pays the premium. In every scheme, the builder pays the HWI premium (typically built into the contract price). The certificate covers the homeowner, not the builder. Premium cost is typically 0.5% to 1.5% of the contract price depending on the builder’s risk profile and the scheme.
Premiums and eligibility tightening (2020+). All states have tightened HWI eligibility since around 2020 in response to high-profile collapses (Toplace, Probuild, Porter Davis). Higher premiums for new entrants, financially stressed builders, and builders with prior claims. Some builders effectively cannot obtain HWI and so cannot operate above the threshold.
Mandatory before payment. In NSW, VIC, QLD, SA, WA, ACT, and NT, the home warranty certificate must be in the client’s hand before any payment is taken from the client. Issuing a deposit invoice before delivering the certificate is a regulatory breach.
For builders.
- Apply for HWI certificate as early as practical in each new job; don’t leave it to the day before the deposit is due.
- Build the premium into the contract price as a line item. Don’t absorb it as overhead.
- Hand over the certificate to the client at deposit invoice, not later. The client retains it; the builder keeps a copy on file.
Also known as: HWI, builders warranty insurance, domestic building insurance.
Category: Compliance / insurance / state schemes.
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Last updated: 2026-05-14. Verified: 2026-05-14.