Adams & Partners Lawyers (“APL”) provides specialist advice on building law in the Penrith, Parramatta and Hawkesbury areas. APL operates legal offices in both Penrith and Parramatta.

A topic that raises its heads regularly is when do I need Home Warranty Insurance?

The NSW Government requires Builders and Tradespersons to take out Home Warranty Insurance before they receive or demand money from a Home Owner (“Home Building Act 1989”).


Some relevant questions are:-

Q:          When does a Builder/Tradespersons need to take out Home Warranty Insurance?

A:          When the residential building work exceeds $20,000. This cost includes both labour and materials.

Q:          Who provides Home Warranty Insurance?

A:          The Builder/Tradesman will need to apply though a Broker such as the Housing Industry Association or Master Builders Association. The underwriter of the Insurance Policy is iCare that manages the Home Building Compensation Fund. This fund is NSW Government guaranteed.

Q:          What does Home Warranty Insurance cover?

A:          The policy will cover a Claim from the Owner of the Property and any Successor in tile up to $340,000.00. The cover will be for defective, incomplete work and legal costs.

Q:          What period is the cover for?

A:          2 years for defective work (non-structural) and six years for major defective work (structural) from the date of completion of the Building Work.

Q:          Is Home Warranty/Insurance necessary?

A:          Yes. A Builder/Tradesman must obtain Home Warranty Insurance with residential work exceeding $20,000 before they ask you to pay any money under the Building Contract. The Certificate of Insurance should be attached to the Building Contract.

Q:          Is Professional Indemnity Insurance the same as Home Warranty Insurance?

A:          No. Normally this type of Insurance covers professionals such as Architects, Engineers and Private Certifiers for providing negligent advice.

Q:          When can I claim on Home Warranty Insurance if the need arises?

A:          When the Builder/Tradesman fails to rectify/complete the Building Work and they become insolvent, dies or disappears or have their licence suspended by NSW Fair Trading for failure to comply with an Order of a Court or Tribunal for non-payment of compensation.

The above questions and answers are subject to exceptions.

The information is current as at September 2019.

Adams & Partners Lawyers can assist with any building issue including:-

  1. Building Contracts
  2. Home Warranty Insurance Claims
  3. Appearances in any Court or Tribunal
  4. Meditation of Disputes.

Please contact Peter Adams, Atul Singh or Cameron Spanner if you need assistance.

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