Home building compensation (HBC) cover – formerly known as home warranty insurance – is an important consumer protection for homeowners in NSW.
It helps homeowners if their builder is unable to complete building work or fix defects because they have become insolvent, died, disappeared or had their licence suspended for failing to comply with a money order made by a court or the tribunal in favour of the home owner.
HBC cover of at least $340,000 is needed for any residential home or renovation project costing over $20,000 including GST, unless exempt.
Future owners of a property are covered for the statutory warranty period (six years for major defects in the work and two years for other losses from the date of completion of work). An additional six months cover applies in cases where the loss becomes apparent in the final six months of the period of insurance. The six-month period starts from the date of the loss becoming apparent.
Reforms to the NSW HBC Scheme commenced on 1 January 2018. The reforms mean consumers will continue to be protected, there will be better regulation and monitoring, the market is open to competition and innovation, and the scheme can become financially sustainable.