NSW Home Warranty Insurance Fund

What is the New South Wales Home Warranty Insurance Fund?

The New South Wales Home Warranty Insurance Fund is a statutory insurance scheme that provides insurance cover for certain residential construction work valued at more than $20,000.

The scheme provides protection for consumers where:

  • There has been faulty or incomplete work on residential buildings.
  • The builder becomes insolvent, dies or disappears.
  • The builder’s licence is suspended or cancelled by NSW Fair Trading.

The scheme is currently administered by the NSW Self Insurance Corporation under the NSW Self Insurance Corporation Act 2004 and is a part of the Office of Finance and Services.

Who are the insurers?

The New South Wales Home Warranty Insurance Fund outsources the provision of services to insurance agents. These agents are currently Calliden Insurance Limited and QBE Insurance (Australia) Limited.

Is there a limit to the amount I can claim?

The maximum amount of cover provided under the scheme is $340,000 (for policies issued from 1 February 2012). There are other limitations on the amount that a homeowner can claim. For example, a claim for non-completion is capped at 20% of the contract price.

What works are covered?

The New South Wales Home Warranty Insurance Fund covers ‘residential building work’ and ‘owner-builder work’ as outlined in the Home Building Act 1989 (NSW) and the Home Building Regulation 2004.

When are premiums payable?

A policy of insurance for residential building work must be taken out by the holder of the building licence prior to commencing work.

The premium payable is based on an assessment of a number of risk factors which are specific to the project. These risk factors may include the location of the project, the contract price and the risk presented by the type of work (e.g. structural, non-structural, owner-builder etc.). The builder must be assessed for eligibility before they can apply for a certificate of insurance in relation to a building project.

How do I make a claim?

A homeowner seeking to make a claim under the New South Wales Home Warranty Insurance Fund must first give written notice using the Loss Notification Form to the insurance agent who issued the Certificate of Insurance.

A homeowner must then take action to try and resolve the dispute with the builder and to have the builder complete and/or rectify the subject building work. For example, the homeowner may lodge a complaint with NSW Fair Trading, lodge a building claim with the NSW Civil & Administrative Tribunal (NCAT) or commence court proceedings. If the homeowner fails to take steps to enforce the statutory warranty, the Home Warranty Insurance Fund may reduce its liability under the insurance policy.

What happens after I submit the Loss Notification Form?

Once the insurance agent receives the Loss Notification Form, they will undertake preliminary investigations into the dispute. They will also issue to the homeowner a Home Warranty Insurance Claim Form within 5 business days of the contact. The homeowner should complete and return the claim form as soon as practicable. The insurance agent will notify the homeowner whether the claim has been accepted or whether further information is needed within 30 days of receipt of the claim form.

What are the time limits for making a claim?

The Loss Notification Form must be lodged with the insurance agent within six (6) months of the homeowner becoming aware of the existence of defective work. In the case of incomplete work, the homeowner must lodge the Loss Notification Form within 12 months of:

a.     the contract date, or

b.     the date of the commencement of work pursuant to the contract, or

c.     the date the work ceased,

whichever is the latest.

When does my insurance coverage end?

The coverage periods are as follows:

  • Non-completion claims – 12 months from the failure to commence or from the cessation of the building work.
  • Non-structural defects – 2 years from the date of completion.
  • Structural defects – 6 years from the date of completion.

Does my insurance cover strata defects?

Strata defects are covered by the insurance fund, however, the claim must be issued on behalf of the Owners Corporation. Such claims require approval of the Owners Committee or the Strata Plan.

For more information contact us.