A step by step guide for homeowners who need to make a claim through the Home Building Compensation Fund.
As a homeowner, if you suffer a financial loss because a builder or tradesperson (the contractor) fails to start or complete the building work, or fails to fix defective work, there are a number of steps you should follow to protect your interests.
1. Know what the insurance covers
In general terms, the insurance can cover:
- loss resulting from incomplete work because of early termination of the contract (conditions apply)
- loss resulting from a breach of statutory warranty (e.g. work is not done with due care and skill, or as per the plans, or the materials used are not suitable, or the work does not comply with the law)
- loss resulting from faulty design provided by the builder
- the reasonable costs of alternative accommodation, removal and storage
- the loss of deposits or progress payments (conditions apply)
- the legal or other reasonable costs incurred in seeking to get compensation
- the loss resulting from the work done by the subcontractors of the builder
- the loss resulting from the work done by the builder to rectify the problem after completion of the work
However, you can only make a claim if the contractor has:
- become insolvent
- died or disappeared, or
- had their licence suspended because they did not pay you compensation that had been ordered by a tribunal or court (only if your police was issued on or after 19 May 2009).
It is important to quickly notify the insurer that you have suffered the loss.This can preserve your ability to claim beyond the end of the period cover in some circumstances. You should also try to pursue the contractor to resolve the problem without delay. NSW Fair Trading can help you to resolve the dispute with your builder.
All insurance policies issued from 1 February 2012 provide a cover of $340,000. An excess fee of $250 applies.