What is Builders Warranty Insurance?

Builders Warranty Insurance (also called Home Owners Warranty) is a form of insurance that applies to home building work that requires building approval and costs $12,000 or more1. It protects the homeowner (and any subsequent owner) against financial loss in the event that contracted building work isn’t completed or is considered defective and the builder has died, disappeared or become insolvent.

Key Highlights

Builders Warranty Insurance compensates homeowners in the ACT when a builder dies, disappears or becomes insolvent and is unable to complete a building project or the building works are defective.

The cover also applies if the builder is an organisation and that business ceases to exist or becomes insolvent.

  • Homeowners can be compensated up to a maximum of $85,000.
  • The policy is effective for five years from the date the dwelling is first occupied.
  • Policy applies to both structural elements of a building, including external walls, and minor/non-structural elements.
  • Having ‘eligibility’ to purchase warranty insurance allows business to undertake projects they are targeting.
 
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Why might I need Builders Warranty Insurance?

The Home Building Act states that builders who contract directly with a homeowner or developer to perform residential building work must take out a policy of Builders Warranty Insurance. That makes Builders Warranty Insurance mandatory for residential building work in the ACT with a project value over $12,000.

Builders Warranty Insurance is required for any building work on residential apartment buildings and houses three storeys or lower, excluding any storey used exclusively for carparking.

It’s important to note that builders must take out Builders Warranty Insurance before commencing work on a project or requesting a deposit or any other payment. It’s the responsibility of the builder to obtain the insurance and the builder must also provide the homeowner with evidence of the insurance.

For more information, visit the ACT government’s Department of Environment, Planning and Sustainable Development website.

What is covered under Builders Warranty Insurance?

In the ACT, Builders Warranty Insurance covers the homeowner up to a maximum of $85,000 during the policy period, which is five years from the date of occupancy for all structural and non-structural alterations and additions.

 

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Why HIA Insurance Services?

HIA Insurance Services (HIAIS) combines the construction industry expertise of the Housing Industry Association (HIA) with the risk and insurance knowledge of Aon to provide products and advice that are specific to the residential construction industry.

We understand the unique risk exposures of builders, tradies and subcontractors in the ACT. As one of the largest and most experienced insurance providers in the country, we can offer our customers cost-effective policies tailored for risks commonly found in the construction sector, as well as fast and efficient claims processes.

 

Frequently Asked Questions

The homeowner warranty certificates will take 24–48 hours to be processed provided you have an approved profile with the insurer, and subject to peak periods. Note that backlogs can sometimes cause a delay.

Yes, it’s quicker to gain approval when you provide all the necessary documents from the outset.

All new applications in ACT require a technical reference. If one can’t be supplied, you will need to provide a building resume.

1As at June 2021