Home Warranty Insurance in QLD is a premium that is paid directly by the building contractor to the Queensland Building and Construction Commission for all residential construction work that exceeds the $3,300 (including GST, material, and labour) threshold.

It is the responsibility of the builder to charge the property owner the premium as part of the building contract. Once the premium has been charged, the builder must submit the insurance premium to the Queensland Building and Construction Commission before commencing works.

What is home warranty insurance?

Before we jump in, it’s important to establish the distinction between builder’s warranty insurance and regular home and contents insurance. These are not the same thing and shouldn’t be confused. 

Home warranty insurance is a compulsory insurance that is paid as part of all building and renovation contracts in Queensland that are valued at more than $3,300 (including GST, material, and labour). 

Builders home warranty insurance is paid directly to the Queensland Building and Construction Commission by building contractors before commencing and residential construction work that meets or exceeds the $3,300 value threshold. The contractor charges you (the individual contracting the builder) the premium for builder’s warranty insurance as part of your building contract.

Before commencing any building work, it’s important to establish that your building contractor has charged you the home warranty insurance and subsequently submitted that premium to the Queensland Building and Construction Commission.

While contractors are obligated to collect the premium for all works that exceed the mentioned $3,300 value threshold, home owners must understand that they will not be covered unless the contractor collects and submits the premium – potentially leaving the home owner vulnerable for any expenses for incomplete or defective renovation works.

What does home warranty insurance cover?

Home warranty insurance in Queensland only applies to residential construction projects. The Queensland Building and Construction Commission covers both fixed-price residential contracts for:

• Non-completion claims
• Defective work claims 

As well as cost-plus residential contracts for: 

• Defective work claims

The Queensland Building and Construction Commission advises against cost-plus residential contracts because they provide no certainty around the final price that was agreed to be paid under the contract. As a result, chasing defective work claims can be fraught with complications because The Queensland Building and Construction Commission is unable to determine the losses that have been suffered.

How long does home warranty insurance last?

Home warranty insurance in Queensland lasts for a period of 6 years and 6 months from when the contract begins or from when the premium is paid to the Queensland Building and Construction Commission – whichever comes first.

For building projects that take longer than 6 months to complete, home warranty insurance can be extended. For home owners undergoing major renovation work that can take a period of years, you can still be covered for a significant period (up to 6 years) after the project is completed. Extended home warranty insurance provides peace of mind for any defects that may occur or become apparent after the final handover has been completed.

Important caveats for home warranty insurance in Queensland:

• Homes that are sold while still covered under home warranty insurance in Queensland can be transferred to the new owners.
• Home warranty insurance cannot be transferred between contractors. In cases where a job is started by one builder and then completed by another, the warranty insurance cannot be transferred between parties. Each builder must enter into a new contract agreement and take out separate insurance. In cases where multiple builders have worked on the same project, it’s important to establish a clear division between the two projects so that homeowners have a clear path to fault attribution and recourse should they need to.

Ensure your builder is home warranty insurance compliant

In Queensland, building contractors must include the cost of taking out insurance through the Queensland Home Warranty Scheme as part of your quote. Builders that do not comply with this regulation face heavy penalties – so it’s important to make sure that this is included in your quote. 

While it is the responsibility of the builder to provide details in your quote and subsequent contract, it’s important for homeowners to understand the risk that they take on if their builder is not compliant. Ultimately, while it is the responsibility of the builder to comply with the Queensland Home Warranty Scheme, it is the homeowner that will suffer if there is no insurance in place.