Home Owners Warranty

Due to tough economic times for the construction industry, the number of home owners warranty insurance claims for incomplete works has dramatically increased.


The amendment to the Home Building Regulations 2004, effective from 17 February 2012, provides that insurance policies issued from that date can allow 20% or more of the contract value for incomplete works.


Clarification of excess for a common property HOW claim.


Home warranty insurers in NSW have paid out over $400 million since 2002. Premiums would have been only a fraction of that. It is a small wonder that private insurers want out, and that for the foreseeable future consumer protection for residential building defects will have to be provided by the state government through its public insurance arm SICorp.

Home warranty insurance remains one of the most complex liability products on the market to deal with due to the constant interplay with legislative reform, some of which is retrospective and some of it which is not. Please click here to view our PowerPoint that explores some of the relevant developments.


Construction entails many risks to a builder by virtue of its occupation, control and/or ownership of the site. The risks include personal injury or death to persons and damage or destruction of property (including the contract works itself).


Anecdotally, we understand that SiCorp trading as the Home Building Compensation Fund (HBCF), the insurer who administers and underwrites insurance under the HBCF (formerly known as Home Owners Warranty Insurance) has tightened controls on the issuing of that insurance.


The Home Building Act 1989 operates in many unexpected ways, for instance a lot of its focus is on managing insurance risk of Builders as opposed to managing quality of construction.


A glaring example of this is that if a licenced contractor is unable to obtain the home warranty insurance from the Home Building Compensation Fund it can perform residential building works of less than $20,000 or construct new residential buildings of four or more storeys of any value  (even tens of millions of dollars).