Home Building Insurance Audit to Protect Homeowners
25 August 2023
Recent building company insolvencies have demonstrated the importance of compulsory home building insurance to protect people building homes in NSW. While most businesses do the right thing, there is a minority that are not complying.
Some businesses have been taking money from customers or starting building work without insurance, and in some cases, not buying insurance at all. This unlawful conduct has caused considerable financial loss to some homeowners.
In September 2023, the State Insurance Regulatory Authority (SIRA) is starting a compliance audit of businesses that build homes in NSW, to ensure they have compulsory home building compensation (HBC) insurance.
Businesses in NSW must buy HBC insurance for each residential building work project they do over $20,000 (including GST), unless exempt. This includes building, trades or specialist work done to a home, such as the construction of a house or an apartment building up to three storeys, or renovation or alterations to residential buildings of any number of storeys, and home additions such as swimming pools.
Businesses must buy this insurance before requesting or accepting any money for the work (including a deposit) or starting the residential building work. The insurance protects homeowners as a last resort if a business can’t complete work on their home or fix defects
The first stage of SIRA’s audit will look at 100 businesses that build ‘Class 1’ homes such as houses or duplexes. SIRA is prioritising businesses for audit based on the number of projects for which there are no matching insurance records, or for which the construction certificate and insurance dates indicate a risk that the work may have started or payments been taken before insurance was purchased. Selection for audit does not mean a business has done anything wrong, as there can be a lawful reason.
People building a home can help protect themselves by checking that the business they have contracted has given a certificate of HBC insurance. Verify your insurance is genuine by entering the certificate number in the ‘HBC Check’. Make sure the name of business and your address matches the insurance.