QBCC Home Warranty Insurance QLD: Cover Limits, Premiums and Claim Deadlines

Quick answer: QBCC home warranty insurance (the Queensland Home Warranty Scheme) protects homeowners if a licensed builder can’t complete the work or fix defects because of insolvency, death or disappearance. It’s compulsory for most residential building work valued over $3,300.

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Hi everybody – George Sourris, Empire Legal.

Today’s topic: QBCC QLD Home Warranty Scheme – what you need to know!

Today we’re talking about putting on the hard hat and talking building and renovating. All right, let’s be real – I’m not a builder. I don’t have a hard hat, but I am going to talk you through the Queensland Home Warranty Scheme (HWS).

The Home Warranty Scheme’s purpose is to provide cover for you in the event that something goes wrong with your renovation or build.

The Scheme is governed by the Queensland Building and Construction Commission (QBCC). Shout out to the QBCC for providing the information for today’s blog. The Queensland Home Warranty Scheme obliges most building work in Queensland, valued at over $3,300 (which is inclusive of labor, materials and GST), to have insurance through the scheme. The HWS is a not for profit and is funded through the payment of the premiums of the scheme.

What is QBCC home warranty insurance?

Home Warranty Insurance is a premium that the head contractor pays to QBCC to ensure residential construction work for fixed price and cost plus residential contracts. When you start to build or renovate a project, your contractor pays a premium to QBCC to insure the work. The premium amount is collected from you and paid to the QBCC by the contractor, included as part of your contract, paid before the work begins, and compulsory for all residential construction work valued at more than $3,300.  

What QBCC insurance covers

Home warranty insurance only applies to residential construction work. The insurance covers the homeowner for loss if something goes wrong during the build. Within a certain time period (more on this later), you can make a claim. If your contractor does not or cannot finish the work you contracted them to do, a non completion claim can be lodged. This must be brought within 2 years of the date of the contract , or 2 years from when the work started. You must lodge the claim within 3 months after the date the contract ends. If the QBCC has accepted your claim for non completion of work and your building project is:

• damaged by a fire, storm, vandalism or theft;
• if your contractor does not fix defects (a defect work claim); or
• if the building suffers from subsidence or settlement.

Once QBCC pays out a claim, they then try to recover the amount they have paid to finish or fix the work from the contractor. Home Warranty Insurance pays up to a maximum of $200,000 on claims. Claims are subject to certain limitations and some exclusions apply.

Which building contracts QBCC insurance covers

Fixed price residential contracts can be covered for non completion claims or defective works. A cost plus contract can generally only be covered by defective work claims. This is because to settle a non completion claim, the QBCC needs to know how much you agreed to pay to finish the work under your contract. Cost plus contracts (usually not recommended), have no certainty about the final price. So QBCC won’t be able to quantify if you’ve suffered any loss.

QBCC insurance in brief: how it differs from regular insurance

Many homeowners get confused about home warranty insurance. It differs to regular insurance, such as home & contents, because it covers the building process, so you can claim if the project is not finished or has defects.

• It is compulsory for residential building projects valued at more than $3,300;
• it’s paid as part of the building or renovation contract;
• it’s administered and governed through the QBCC;
• it lasts for 6 years and 6 months;
• it covers the property so the insurance remains if the home is sold.

This is a big one guys, so even if the property is sold, that insurance is going to stay with the property.  It cannot be transferred between contractors, it has to be claimed within certain timeframes, which depend on the type of claim. It has limits to the max amount that can be paid. It also is affected if you pay your contractor more than is allowed by law under the contract. It cannot be renewed once the cover expires, so it’s got the hard deadline,  does NOT cover commercial building projects, and is NOT home and contents insurance.

How to search the QBCC register before you buy

If you’re buying a home, you or your legal agent can search the register, to see if any home warranty insurance is attached to the property. So that’s pretty cool. If the property is not so old, or it’s had a reno, you can jump in and see if there’s still any insurance left on the property. Again, this cover is 6 years and 6 months from when the contract is entered into, or the premium is paid – whichever is earlier. It can be extended if the construction took more than 6 months to complete.  It may help you with any defects that develop after you move in. So, non structural defects are covered, if you become aware of them within 6 months from the day the works are completed; and you must lodge a claim within 7 months the day the works are complete. So, get on that. If you have defects, get straight onto it.

Who pays the QBCC insurance premium?

The licensed contractor that is doing the work collects the money from the client, pays the QBCC on behalf of the client. The premium gets paid BEFORE the work starts. You can also get optional cover (up to 30 business days after the contract date). This optional cover protects the consumer. For example you can upgrade from $200k to $300k  as a threshold. For a full breakdown of these benefits, click here. Alright, so keep this in mind, guys. We’re not the QBCC or Home Warranty Scheme experts. The blog’s purpose is to bring awareness to the audience that the Home Warranty Scheme exists. If you have any concerns, please chat with HWS direct. I’ve placed a link here if you want to read more about the Home Warranty Scheme. Thank you everybody. If you know someone who’s thinking about doing a reno or a build, you’ve got to share this one with them so they know all about the scheme. Thanks guys. See you next week.

How much does the QBCC home warranty scheme cover?

The scheme is capped, and the caps are per category rather than one pool of money:

• $200,000 each for refunding your deposit, completing incomplete work, rectifying defective work, fire or storm damage to incomplete work, and subsidence or settlement
• $5,000 sub cap for alternative accommodation, removal and storage

If the builder took out the optional additional cover, those figures rise to $300,000 and $10,000. Whether that was purchased is worth knowing before you assume you are covered on a high value build.

What is the QBCC premium table and how is the premium worked out?

The premium is not a flat fee. QBCC publishes a premium table that sets the amount on a sliding scale against the value of the insurable work, with separate tables for new homes and for alterations, additions and renovations.

Two things matter more than the exact rate:

• The builder pays the premium, and passes it on to you in the contract price. It is your money either way, so it should appear as a line item.
• The premium must be paid before work starts. A builder who has not paid it has not triggered your cover, no matter what the contract says.

Rates change, so check the current table on the QBCC site rather than a figure quoted in an article. What does not change is that an unpaid premium is the single most common reason a homeowner discovers they have no cover, usually at the exact moment they need it.

How long does QBCC home warranty cover last?

Cover runs for 6 years and 6 months, from the earliest of the day you pay the premium, the day you agree to the contract, or the day work starts.

Note the trigger is the earliest of those three, not the day the house is finished. On a long build that quietly eats into your cover period.

How long do you have to make a QBCC claim?

This is where most claims die, and the windows are short:

• Structural defects – you must become aware of the defect within the 6 years 6 months, and lodge the claim within 3 months of first becoming aware of it.
• Non structural defects – you must identify it within 6 months of the work being substantially complete, and claim within 7 months of substantial completion.
• Non completion – lodge within 3 months after the contract ends, where the contract ends within 2 years of work starting or the contract being entered into.

Three months from becoming aware is the number to remember. Homeowners routinely spend six months arguing with the builder before they think about the QBCC, and by then the claim window has closed on a defect that was covered.

What does QBCC home warranty not cover?

It is a last resort scheme, not a building warranty in the general sense. It does not cover work below the insurable threshold, work by an unlicensed person where the premium was never paid, ordinary wear and tear, or your consequential losses beyond the accommodation and storage sub cap. It is also not a substitute for your own building insurance once the home is complete.

What buyers of a recently built home should check

If you are buying a house built in the last six and a half years, the remaining cover can transfer value to you, so check:

• When the contract was entered into or work started, because that is when the 6 years 6 months began
• Whether the premium was actually paid, on the QBCC register
• Whether there are existing complaints or directions to rectify against the builder for that address
• Whether any work was done by an owner builder, because owner builder work is not covered by the scheme at all

An owner built extension on an otherwise new house is a common and unpleasant surprise. The house has cover. The extension does not.

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George Sourris. Empire Legal.

If you have any questions, you can email me: george@empirelegal.com.au.

If this has added value, please share this blog / the YouTube video with a friend. Thanks for reading everybody. See you on the next one. Ladies and gentlemen, please keep in mind that all advice is general in nature and does not constitute legal advice. This is authorised by George Sourris, Empire Legal, Brisbane, Queensland, Australia.

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