Home Building Compensation Fund – formerly known as the Home Warranty Insurance Scheme

Home Building Compensation Fund (HBCF) reform

The NSW Government has announced an overhaul of the HBCF to enable private insurers to enter the market and improve protections for consumers against incomplete and defective work. Further information on HBCF reforms can also be found on our newsfeed.

Information for Licensees

Home warranty insurance needs to be provided by:

  • A builder or trades person before taking any money (including a deposit) from a home owner (including an owner-builder) under a residential building contract and before starting any work under that contract
  • A ‘spec’ builder before starting any residential building work on a property owned by the builder
  • A developer before entering into a contract for the sale of a property on which a builder is doing or has done residential building work for the developer
  • An owner-builder (i.e. a home owner who did owner-builder work under an owner-builder permit) before entering into a contract for sale of the property on which residential building was done within the previous 6 years.
Insurance threshold

Home Warranty Insurance is required to be obtained where the contract price is over $20,000 or, if the contract price is not known, the reasonable market cost of the labour and materials involved is over $20,000.


Where the contract price or the reasonable market cost of the labour and materials involved does not exceed the above threshold, there is no legal requirement for home warranty insurance to be obtained.


Contractors who carry out residential building work must still hold an appropriate licence with Fair Trading where the labour and materials involved are valued at over $1,000.


Persons who contract and/or carry out specialist work (i.e. electrical wiring, plumbing, gas-fitting, air-conditioning and refrigeration) require a licence regardless of the value of the work.

Periods and types of cover

Home warranty insurance provides a set period of cover for loss caused by defective or incomplete work in the event of the death, disappearance or insolvency of the contractor.


Policies issued from 19 May 2009 also enable home owners to make a claim where the licence of the builder or tradesperson responsible for the work is suspended or cancelled for failing to comply with a money (compensation) order made by the Consumer, Trader and Tenancy Tribunal or a Court.


Cover for loss arising from defective work is provided for a period of:

  • 6 years from the date of completion of the work or the end of the contract for the work (whichever is the later) for loss arising from a structural defect, and
  • 2 years for loss arising otherwise than from a structural defect.


An additional 6 months cover applies in cases where the loss becomes apparent in the final 6 months of the period of insurance. The 6-month period starts from the date of the loss becoming apparent. Cover is also provided for loss arising from non-completion of work for a period of 12 months after the failure to commence, or cessation of, the work.

Our Role

CRM Brokers has been arranging home warranty insurance since 1997 for builders, trade contractors and owner-builders. During that time our role has adapted to the various changes in arrangements and reforms, including the most recent change, by which HBCF will have a fixed panel of new Broker Distributors. One thing that will remain the same is the high level of service and commitment to our clients’ Home Warranty needs.

In that regard and going forward, we will on behalf of our clients:

  • Collect information pertaining to job applications and prepare for submission;
  • Liaising with our clients, the Nominated Distributor and Your strategic partners/accounting partners to assist with the preparation of eligibility reviews and new applications;


By providing these services, We declare that

  • We are not authorised to advise You on HBCF insurance or on behalf of the Nominated Distributor and that any advice given is in our capacity as your Broker;
  • Prior to the provision of any service to the You, we will disclose any fees we will charge for that service;
  • Ensure no documentation relating to HBCF Insurance, paper or electronic, held by Us leaves the Commonwealth of Australia;
  • We cannot communicate on behalf of the Nominated Distributor or icare HBCF with homeowners wishing to make a claim under the policy;