If you are building or renovating your home as an owner-builder, you can't take out insurance under the Home Building Compensation Fund. However, each contractor doing work for you must take out insurance if the work is worth more than $20,000 inclusive of GST. If an owner-builder sells their property within 7 years and 6 months after the owner-builder permit was issued, they must include a consumer warning in the contract of sale.
Owner-builder work is any residential building work (including supervision and coordination) involving in the construction of, or alterations, repairs or additions to, a dwelling:
- where the reasonable market cost (including labour and materials) exceeds $10,000, and
- which relates to a single dwelling-house, dual occupancy or a secondary dwelling that requires development consent under Part 4 of the Environmental Planning and Assessment Act 1979, or that is a complying development within the meaning of that Act
As an owner builder, if you suffer a financial loss, you can make a claim under a contract for HBCF insurance if your contractor fails to start or complete the work, or fails to fix defective work.
You can only claim if they can’t do the work because the contractor has:
- become insolvent/bankrupt
- died or disappeared
- had their licence suspended due to non-compliance with a Tribunal or a Court order if your policy was issued on or after 19 May 2009
When they take out insurance they will receive a certificate of insurance. You need to have a copy of this certificate before work starts, and before you pay them any money.
The certificate acts as proof they have insurance, and you’ll need it if you want to make a claim.
Becoming an owner builder
You need to have a permit to be an owner-builder. NSW Fair Trading has more information on becoming an owner-builder.
What you can claim for
All insurance policies issued from 1 February 2012 provide a cover of $340,000. See current scheme and cover for more information.
Making a claim
Visit our making a claim pages for more information on the full claims process.