Home warranty insurance (it has a different name in every state) is the cover the BUILDER takes out to protect the HOMEOWNER — if you die, disappear or go insolvent and cannot finish or fix the work. It is a "last resort" safety net, it is mandatory above a project-value threshold in every state except Tasmania, and you generally cannot legally take a deposit or start work above the threshold without it.
What it is — and what it is NOT
It covers the homeowner for non-completion (you die, disappear or become insolvent) and rectification of defects that breach the statutory warranties (see Statutory Warranties & Defects), plus associated losses (lost deposit, alternative accommodation) up to caps. It is NOT a first-line defects policy — it is a last-resort scheme that only responds when you, the builder, can no longer make good. While you are trading, defect claims come back to you, not the scheme.
The state schemes, thresholds and caps
Each state runs its own scheme with its own name, threshold and cap:
| State | Scheme | Threshold | Cap (indicative) |
|---|---|---|---|
| NSW | Home Building Compensation (HBC) | >$20,000 | ~$340,000 |
| VIC | Domestic Building Insurance (DBI) | >$16,000 | $300,000 (20% incomplete sub-limit) |
| QLD | QBCC home warranty | >$3,300 | per QBCC rules |
| WA | Home Indemnity Insurance (HII) | >$20,000 | $200,000 + $40,000 deposit, $500 excess |
| SA / NT / ACT | builders warranty | ~$12,000 | per jurisdiction |
| TAS | no mandatory scheme | — | — |
You must be licensed and approved by the insurer or authority to obtain it — if you cannot get cover, you usually cannot legally contract above the threshold. (Owner-builders have their own obligations on sale — see Owner-Builder.)
Coverage periods and triggers
- Coverage periods generally run from completion or practical completion: NSW 6 years major defects / 2 years other; VIC 6 years structural / 2 years non-structural; WA 6 years from practical completion. Non-completion claims have a shorter window (e.g. NSW about 12 months from a failure to start or finish).
- Triggers: insolvency, death and disappearance — and in NSW and VIC, the builder's failure to comply with a final tribunal or court order in the owner's favour (VIC: policies from 1 July 2015), even if you are solvent and alive.
- "Completion" is the pivot — coverage periods run from it, so the contract's completion definition matters.
What it excludes
- Wear and tear and maintenance (paint fade, worn carpets, minor settlement cracks, owner negligence).
- Acts of nature (flood, earthquake) unless tied to builder negligence — that is home insurance.
- NSW excludes residential buildings of 3+ storeys from the requirement, so there is no cover there.
- Work below the threshold and exempt work (pure demolition, built-in-furniture-only).
- A mortgagee in possession unless named.
Plus the caps and excesses above — think of the "minimum" as the project-value threshold that triggers the requirement, plus the excess, not a fixed minimum claim amount.
Common mistakes
- Taking a deposit above threshold without the certificate of insurance in place.
- Assuming TAS has a scheme — it does not.
- Treating it as your own defects cover — it is last-resort only.
- Forgetting the NSW 3+ storey carve-out.
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