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"Home Warranty Insurance - now there's a term that has struck fear into owners and builders alike for many years.  The collapse of HIH all those years ago really shook the industry to it's core but times have changed since those dark days and there's been some major developments and improvements in this complicated area.  I've put together a quite comprehensive report on this topic - along with the latest change of name to the Home Building Compensation Fund - and I'm sure you'll get a lot out of it with many reference sites to ensure there is no stone left unturned."

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HOME BUILDING COMPENSATION FUND - previously HOME WARRANTY INSURANCE

• What it is
• HBCF Regulations
• Specific Information for Builders & Tradies
• For Developers
• Calculate Premiums
• For Home Owners
• For Owner Builders
• Forms
• Making a Claim

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What it is

OK - strap yourselves in folks as the changes seem to come thick and fast in this area...
New Home Warranty Insurance arrangements for NSW commenced on 1 July 2010 when the NSW Self insurance Corporation took over as the sole provider of home warranty insurance within NSW.

At the time, this gave us the NSW Builders Warranty which eventually morphed into the NSW Home Building Compensation Fund (HBCF) - which we still have today - sort of.  The HBCF became the NSW ICare Home Building Compensation Fund under the control of ICare but regulated by the State Insurance Regulatory Authority (SIRA)  Whew...did you get all that?  Not sure even I did...and, as of August 2018 there are even more reviews in the pipeline.

Have a look at the ICare Home Builders Compensation Fund webpage - it might help to make it all a 'little' clearer as to what it provides.

To quote from the NSW ICare site: "The Home Building Compensation Fund provides a safety net for home owners in NSW faced with incomplete and defective building work carried out by a builder or tradesperson.  Licensed contractors that take on residential work valued at $20,000 or more need insurance cover through hbcf.  They must obtain this cover before starting any work or taking any money under the contract, including the deposit."

Also read through the Home Building Compensation Cover information page on the NSW State Insurance Regulatory Authority (SIRA) website.  The main menu links directly under the heading tell you what it is, how it affects home owners, tradies, builders and developers and there's even an online register where you can see if your building is covered or not.

Effectively, and as mentioned earlier, it's insurance cover (taken out by the builder) to provide a safety net for homeowners (including subsequent purchasers) for when a builder does shoddy work OR is unable to honour their commitments under a contract due to insolvency, death, disappearance or licence suspension.

This (I hope) pretty much explains it in layman's terms.  Of course there are lots of 'finer details' (as always) such as the exemption for buildings OVER 3-storeys which is covered under the Strata Building Bond & Inspections Scheme). Those exemptions can be found if you click on some of the links listed on this page.

NOTE: As of June 2010, QBE Insurance was appointed as to act as an insurance agent of the NSW Government to assist in managing the transition to the new government-underwritten scheme.  Therefore, QBE is responsible for providing underwriting and claims managements services to the NSW Government.

So, if you are looking for any information or forms to do with this whole area, check out the QBE webpage titled QBE Builders Warranty Insurance.  It's an OK (but not overly exciting or informative) place to start AND, if you look a little further down the page, you'll see separate sections for each state.

HBCF Regulations...

The initial round of changes to the pre-existing Home Building Act 1989 legislation and the Home Building Regulation 2014 - including major changes for the old Home Warranty Insurance scheme - came into effect on July 1st, 2010.  Followed by additional 'tweaks' and more amendments coming into effect on February 1st, 2012.  Then, another lot of changes, which became law, in 2015 resulting eventually in the latest version called the ICare Home Building Compensation Fund (HBCF).  I suspect there WILL be even more changes in the not too distant future.

Interestingly, NSW Fair Trading (FT) seems to steering clear of the whole Home Warranty Insurance and Home Building Compensation fund areas for the time being (as of August 2018).  I couldn't find ANYTHING on their site and I really did try.  Now, that COULD change quite quickly (knowing FT like I do) but, for the moment, the info on these topics is non-existent.

NSW Fair Trading does have a section on the Strata Building Bond & Inspections Scheme (which deals with Strata buildings over 3-storeys high) - so, if this IS of interest, then go over and have a look-see.  Don't forget to check out the rightside menu links on this topic but they're towards the bottom of the page - so you'll have to scroll down to find them.

Another really great summary of the important amendments done for 2011/2012 (but NOT for the 2015 changes) was produced Amy Harper, from a firm known as Kells Lawyers.  This summary is called: Home Building Act changes: what home owners and tradespersons need to know.  Don't miss this one as it's laid out in an easy-to-read and easy-to-follow format.  Thanks Amy.   I'm hoping to see one for the 2015 changes but I haven't found it yet.

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Specific Information for Builders and Tradies

For all of you builders and tradies out there - ensure you read the NSW State Insurance Regulatory Authority (SIRA) on Home Building Compensation Fund - Information for Builders and Tradies to see just what your obligations are.  It's relatively short and to-the-point and will give you most of what you need to know.  Don't forget to look at the submenu down the rightside of the webpage for some more interesting topics.

Remember: You are the ones required by law (in most cases) to take out this insurance!

All Builders and Tradies should also go to the How We Work with Builders & Distributors section and have a good look around the different parts.  All this might look a little scary at first glance but it does have some really important stuff in it.

The Builders section includes the following links:-

• Applying for Builders Eligibility (very popular)
• Applying for Certificates of HBCF Insurance
• Lodge a Complaint or Dispute

TIP - There's a new section on the icare site where Builders can apply for access to an Online portal where they can apply for certificates of insurance and access their personal information ONLINE.  For more information see HBCF Builder Self-Service Portal and I assume it's for tradies, contractors and developers as well.

For Developers

Thought you guys had been left out huh?  Well, you might be right as there's no specific references made to developers - similar to Owner Builders.  It would appear that Developers are currently lumped into the Builders section: How We Work with Builders & Distributors.

Calculate Premiums

And, there's even a section on how to calculate the premiums that must be paid.  This should make you guys (owners & builders) happy as you can now work out what you're up for - avoiding any nasty surprises.  Just go to the HBCF Premium Calculator section.  GUIDELINES for the Premium Calculator can be found HERE.  Definitely worth a look-see just to make sure you're on the right track and that you don't make some silly error.

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For Home Owners

All you homeowners out there should visit the How We Care for Home Owners section.

This section includes the following:-

• Before You Start Building
• Check Your Builder's Eligibility
• What You're Covered For
• Warning Signs
• Making a Claim

SPECIAL NOTE:
There's also a whole lot of other downloads further down the page - like various forms, procedures and so on - that you should take a look at...

For Owner Builders

It appears, at this stage, Owner Builders seem to be lumped into the Owners section: How We Care for Home Owners as there's no specific mention of Owner Builders - Hhhmmm.

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TIP - There are some situations where NO Home Builders Compensation Fund is required - such as buildings over 3-storeys and some off-the-plan sales, amongst others.  So make sure you know how the project is impacted - if at all.

If you don't know the answer - and you can't find it on the ICARE or SIRA websites - then be sure to ask someone who can tell you!!  After all, it's law!  The icare phone number for HBCF enquiries is 02 9216 3224 (your 1st port of call) or you can email them on: enquiries.hbcf@icare.nsw.gov.au  Alternatively you could call NSW Fair Trading on 13 32 20.

Forms

The OLD HBCF site had a great section on Forms and Documents but this new ICare site doesn't - which is a tad annoying.  However, typing HBCF Forms into the SEARCH facility on the ICare site at least brings them altogether even if they are a little difficult to find: Search for HBCF Forms.  At least this gives you a few pages of the main forms used in the HBCF processes and could be handy to come back to if and when needed - AND it covers both Owners and Builders.
BUT, you might have to scroll through a few pages to find the form(s) or information you're after.

Making a Claim

If any of you home owners out there DO make a claim under the NSW ICare policy then it might pay for you to look at ICare's information page titled Making a Claim.  This is such a great resource so use it guys.  It's nice & concise & straight forward with all the necessary follow-up info and forms.

Another great page to refer to (if you're making a claim) is SIRA's Home Building Compensation claims webpage.  It gives you a 3 step "what-to-do" process - which is always helpful.

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Strata Title Terms and Jargon

If you need to know the meaning of one or more of the common terms mentioned above then have a look at the Strata Terms and Jargon Information page.

What is Strata?
Strata Terms and Jargon
Frequently Asked Questions
Do-It-Yourself Strata
Strataman News
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