Homeowners who are left with incomplete or defective construction jobs may be protected by mandatory home warranty insurance in many parts of Australia – but only if the builder has gone missing, passed away, become insolvent or lost their licence.
This type of insurance is purchased by the builder doing the work and has many different names depending on the state you live in.
Home warranty insurance is designed to protect homeowners against incomplete building work and defects from construction in residential projects but it only covers you in specific situations. For example, if your builder:
It's taken out by the builders and tradespeople themselves but is only mandatory when the build project reaches a certain value. This differs between states, as does what it's called.
Home warranty insurance functions largely the same way in both NSW and WA. The main difference is that it's often called "home building compensation" in NSW and "home indemnity insurance" in WA. It can cover you for the completion of building work or fixing defects but only if:
| Response | Gen Z | Gen Y | Gen X | Baby Boomers |
|---|---|---|---|---|
| Yes | 55.06% | 70.38% | 65.46% | 72.16% |
| No | 24.72% | 17.12% | 18.09% | 17.33% |
| I don't know | 20.22% | 12.5% | 16.45% | 10.51% |
Builders warranty insurance is known as "domestic building insurance" in Victoria. It can cover homeowners plus subsequent owners for incomplete or defective building work.
In Queensland, home warranty insurance can cover the homeowner for incomplete construction work, defects and subsidence or settlement but:
Home warranty insurance is mandatory in South Australia, the ACT and the Northern Territories for projects above $12,000 but not in Tasmania. It covers homeowners for incomplete construction and structural defects in a similar way to other states. It can apply if
| State | Minimum value of work | Length of cover for structural work | Length of cover for non-structural work | Minimum cover to be provided by insurer |
|---|---|---|---|---|
| ACT | $12,000 | 6 years | $85,000 | |
| NSW | $20,000 | 6 years | 2 years | $340,000 |
| SA | $12,000 | 5 years | $150,000 | |
| VIC | $16,000 | 6 years | 2 years | $300,000 |
| WA | $20,000 | 6 years | $100,000 |
Whether you're buying your first home insurance policy or looking to switch from your existing one, it always pays to compare. You can choose up to four policies at a time, select "Compare" and view the benefits side-by-side to make sure you get the right cover.
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