QBCC Home Warranty Insurance

Building contractors are required to take out a QBCC Home Warranty Insurance policy on behalf of a homeowner where the value of the residential construction work is more than $3,300.

The purpose of the insurance is to protect the homeowner against: 

• incomplete work;
• defective work; or 
• the building suffering from subsidence or settlement.

If the relevant building contractor does not rectify or complete work under the contract, the homeowner may make a claim through the QBCC Home Warranty Insurance Scheme (the Scheme) within 6 years and 6 months from practical completion for any structural defects, or within 12 months from practical completion for any non-structural defects. 

When must QBCC Home Warranty Insurance be taken out?

The building contractor must collect the insurance premium from the homeowner and pay it to the QBCC within the earlier of:

• 10 business days from when the contract is entered into; or
• the residential construction work starts. 

Unregistered land

The Scheme allows for building contractors to take out insurance without verifying the site with the Titles Office. This means that if the land is yet to be registered, the insurance must still be taken out within the abovementioned timeframes. Of course physical construction does not generally begin until the land is registered and the homeowner has produced evidence of their title.  

What is insurable ‘residential construction work’?

Primary insurable work includes but is not limited to construction or renovation of a ‘residence’ or related roofed building or any building work within the building envelope, the erection, construction or installation of a swimming pool as well as manufactured homes fixed to land in a residential park. A ‘residence’ includes a single detached dwelling, one or more attached dwellings separated by a common wall row house, terrace house, townhouse or villa unit, a building, of not more than three storeys, containing two or more separate residential units. 

If you are doing any ‘primary insurable work’ then any work associated with that is also insurable (known as ‘associated insurable work’). For example, fencing, landscaping, and electrical work. 

Any work on non-residential works, including commercial or industrial premises, and building work for an owner-builder holding the appropriate permit is excluded from insurance coverage. 

Variations

Under Section 70 of the Queensland Building and Construction Commission Act 1991 (the QBCC Act), if the residential construction work being carried out needs to be varied, resulting in the value of the contract increasing by $5,000 or more, the building contractor must notify the QBCC so that an additional insurance premium can be paid. This includes single variations for $5,000 or multiple variations totalling $5,000 or more. 

The building contractor must notify the QBCC prior to the variation works commencing. 

Penalties may apply if the building contractor does not comply with this requirement and if the correct premium is not paid. 

Cancellation and refund of insurance policy

Obtaining a refund of an insurance premium can be difficult. To be eligible for a refund:

• the construction work must not have started;
• the building contractor and homeowner must have terminated the contract; 
• less than one year must have elapsed since the day the contract was signed; and
• the building contractor must have refunded the deposit to the homeowner (less any lawful deductions which could include the insurance premium). 

For further information relating to changing or cancelling a QBCC Home Warranty Insurance policy. 

GST

As the building contractor makes the payment of the premium on behalf of the homeowner, the building contractor is unlikely to be entitled to claim back the GST component of the premium. For further information. 

For further information in relation to QBCC Home Warranty Insurance, please contact a Workplace Adviser on 1300 650 620 or HIA Insurance Services on 1800 762 878.

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