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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 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

OK - strap yourselves in folks as the changes are coming thick and fast...
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 and became known as the NSW Builders Warranty and then the NSW Home Building Compensation Fund (HBCF).  If that wasn't enough, the HBCF became the NSW ICare Home Building Compensation Fund regulated by the State Insurance Regulatory Authority (SIRA)  Whew...did you get all that?  Not sure even I did...and, as of March 2018 there are even more reviews in the pipeline.

Have a look at the ICare Home Builders Compensation Fund - 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.  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 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) and they 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.

Now, do you want a truly great, succinct, indepth explanation of what the Home Building Compensation Fund is and does?  Of course you do.  Then go no further than the NSW Fair Trading (FT) website section called Home Building Compensation Fund.   Most of the finer details you need to know are right there!

NSW Fair Trading continues with the "good intel" with their version of the latest round of changes that came into effect in January and March of 2015 - and, again, it's very worthwhile having a read of this.   The link is: Major changes to home building laws.

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 knowDon'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 Fair Trading fact sheet on Home Building Compensation Fund - Information for tradespeople 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.  Remember: You are the ones required by law (in most cases) to take out this insurance!

Multi-storey Buildings & Exemption

The Multi-storey Buildings - HBCF Requirements information page (produced by NSW Fair Trading) goes over many of the 'twists and turns' associated with this somewhat complicated area.  To find out exactly what IS exempted and what isn't, plus to learn about working on an existing residential building, make sure you click on the link above.

Some Frequently Asked Questions

The Frequently Asked Questions on Multi-Storey Buildings information page (produced by NSW FT) will also provide you builders and tradies out there with a few of the most common issues of interest when traversing the minefield of the Home Building Compensation Fund - especially those dealing with exemption conditions on high rise buildings.  This section might just help you get some of the answers you need.

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For Home Owners

All you homeowners out there should click on the What We Do for Home Owners section.  To uncover other relevant areas you'll have to click on the Builders & Home Owners Menu Tab across the TOP of the page.
This will give you another drop down menu with a number of topics like:-

  • Certificates of HBCF Insurance
  • Claims
  • Lodging a Dispute

and each of these have more sub-topics.

For Builders

All Builders should go to the How We Work with Builders 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:-

  • Builders Eligibility (very popular)
  • Certificates of HBCF Insurance
  • Securities
  • Claims
  • Lodging a Dispute

Again, clicking on each of these tabs will reveal even more sub-topics

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 Builder Self-Service Portal

For Owner Builders

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

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.

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Forms

The OLD site had a great section on Forms and Documents but the new site doesn't - which is annoying.  However, typing HBCF Forms into the SEARCH facility on the new site gives the following: Search for HBCF Forms.  At least this gives you a few pages of the main forms used in the HBCF and could be handy to come back to when needed - and it covers both Owners and Builders.

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.

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 in the icare site - 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) and then NSW Fair Trading on 13 32 20.

Claims

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 NSW Fair Trading's information pages covering the Home Building Compensation Fund claims.  This is such a great resource so use it guys.  It's nice & concise & straight forward.

And the ICare website also has a section on CLAIMS and you get to it by left clicking on the Main Menu Tab "Builders & homeowners" (across the top of the page) THEN left clicking on the CLAIMS menu tab in the left side drop down menu.  A bit of a process I know but it IS there.  My recommendation is to focus on the Fair Trading page 1st.  Just saying...


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.


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DISCLAIMER:  All information on this website is of a general nature and is intended as a guide only.  Readers should check all information obtained from this website for accuracy from other sources and seek professional legal advice before taking any action based on any information obtained from this website.  Information on this website should not be substituted for proper legal advice.  The owners of this website will not be held responsible for any action taken as a consequence of same.

EXTERNAL SOURCES:  The owners of this website do not make any warranty or representations regarding the information, products, services provided by or qualifications of any external sources listed on this website.  Readers should make their own appropriate enquiries regarding accuracy, qualifications, licences, etc.  The owners of this website will not be responsible or liable in any way for any representations made by any external sources listed on this website.

IMPORTANT NOTE:  This website deals with strata matters in NSW, Australia only.  Legislation varies in different states and territories and in other countries.  For information pertaining to places outside of NSW, Australia please refer to the appropriate legislation for your region.



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