Home Building Compensation Fund (NSW)
NSW residential building work >$20,000 requires HBCF insurance.
Who must comply
The principal contractor for residential building work in NSW: licensed builders and trade contractors contracting directly with a homeowner, developer or owner-builder. In most cases a subcontractor working for a principal contractor is not the party who must insure.
What triggers it
Contracting for residential building work in NSW where the total contract price, or the market cost of labour and materials, exceeds $20,000 including GST, unless the work is exempt.
When due
Before starting work or accepting any payment, including a deposit. The certificate must be updated if the contract value or scope changes while work is in progress.
Evidence required
Active Certificate of Eligibility; a Certificate of Insurance for each job; proof that a copy was given to the homeowner before work began or money changed hands; contract showing price and scope; records of any certificate updates for variations; HBCF Portal application history.
Max penalty
Doing residential building work or taking payment without the required cover breaches the Home Building Act 1989 insurance obligation; the statutory penalty is set in the Act and was not restated here. If the work value rises and the certificate is not updated, icare may require additional premium later.
Who must comply with this? The applicability test by industry, business structure and size.
Summary
Under the Home Building Act 1989 (NSW), most residential building work in NSW with a contract price (or market cost of labour and materials) over $20,000 including GST must be covered by the Home Building Compensation Fund, administered by icare. The builder must hold an active Certificate of Eligibility, which sets the types and value of work and the number of open jobs allowed, and must obtain a separate Certificate of Insurance for each job before starting work or taking any payment, including a deposit. HBCF is a last-resort cover: a homeowner can claim for incomplete or defective work only if the builder becomes insolvent, dies, disappears or has their licence suspended for not paying a tribunal or court order. Major defects may be covered for up to six years from completion and other defects for up to two years.
Enforced by
Topics
Related
- CWLTHComply with General Insurance Code of Practice (ICA)ICA Code binds member insurers on conduct + claims + complaints.
- VICDomestic Building Contracts Act 1995 (Vic) — warrantiesVic domestic building contracts include statutory warranties + insurance requirements.
- NSWComply with NSW Design and Building Practitioners Act 2020Designers + builders of Class 2-9 buildings in NSW must register + lodge declarations.
- NSWObtain Subcontractor's Statements before paying subcontractors (NSW)NSW principal contractors obtain a signed Subcontractor's Statement for each payment period to avoid liability for a subcontractor's unpaid workers compensation premiums, payroll tax and wages.
- NSWComply with Residential Tenancies Act 2010 (NSW)Landlords + agents must lodge bonds with Rental Bond Board + comply with notice + minimum standards.
- NSWUnderquoting prohibition (NSW Property and Stock Agents Act 2002)NSW real estate agents must not underquote — Maximum penalty $22,000.
Frequently asked questions
- Who must comply with Home Building Compensation Fund (NSW)?
- The principal contractor for residential building work in NSW: licensed builders and trade contractors contracting directly with a homeowner, developer or owner-builder. In most cases a subcontractor working for a principal contractor is not the party who must insure.
- What triggers Home Building Compensation Fund (NSW)?
- Contracting for residential building work in NSW where the total contract price, or the market cost of labour and materials, exceeds $20,000 including GST, unless the work is exempt.
- When is Home Building Compensation Fund (NSW) due?
- Before starting work or accepting any payment, including a deposit. The certificate must be updated if the contract value or scope changes while work is in progress.
- What is the maximum penalty for Home Building Compensation Fund (NSW)?
- Doing residential building work or taking payment without the required cover breaches the Home Building Act 1989 insurance obligation; the statutory penalty is set in the Act and was not restated here. If the work value rises and the certificate is not updated, icare may require additional premium later.
- What evidence is required for Home Building Compensation Fund (NSW)?
- Active Certificate of Eligibility; a Certificate of Insurance for each job; proof that a copy was given to the homeowner before work began or money changed hands; contract showing price and scope; records of any certificate updates for variations; HBCF Portal application history.
Source: https://www.icare.nsw.gov.au/builders-and-homeowners/builders-and-distributors/do-i-need-hbcf. Rules Mate is not a law firm. Always verify against the live regulator source before acting.