If you’re a builder, spec builder, or tradesperson you must get insurance for each residential building project you enter into contract for, valued at over $20,000 (with some exceptions).
Under this scheme, if a homeowner suffers a financial loss because a builder, spec builder or tradesperson fails to start or complete the building work, or fails to fix defective work, the homeowner is able to make a claim under a contract for Home Building Compensation Fund (HBCF) insurance if the builder or tradesperson has:
- become insolvent
- died or disappeared
- had their licence suspended due to non-compliance with a Tribunal or a Court order (only if the policy was issued on or after 19 May 2009)
All insurance policies issued from 1 February 2012 provide a cover of $340,000.
The insurance also covers subsequent owners of a property for six years for major defective work and two years for other losses. Time starts from when the work was completed.
Please note that a separate definition of completion applies depending upon the type of residential building (eg single dwelling or a strata building).
This means there’s a safety net for them if some things go wrong.