HBCF premium guidelines

We use risk-based pricing, meaning builders will pay a premium based on their insurance risk profile.

HBCF insurance premiums for your project are calculated using:
  • the type of project
  • the total contract value for the project
  • your individual loading or discount rate
  • the location of the project.

Each builder is allocated an individual loading or discount to the base premium.

The loading, or discount, is based on each builder's insurance risk profile as assessed using actuarial guidelines. It is not a reflection of the quality of the work of the building contractor. 

HBCF Construction Types and premiums

In December 2021, the State Insurance Regulatory Authority (SIRA) published guidelines for managing Home Building Compensation (HBC) insurance premiums and eligibility. These guidelines are based on the recommendations of the Independent Pricing and Regulatory Tribunal (IPART) review of the scheme.

The guidelines change Construction Type definitions to align more closely with building classifications in the National Construction Code.

From 1 October 2022, icare HBCF reduced the number of Construction Types from nine to five. Premiums have also changed to align to these categories. These changes:

  • simplify the way HBCF premiums are calculated, making the system more user-friendly and streamlined
  • improve how premiums are regulated for different types of construction projects
  • result in a fair allocation of the premiums for insuring different types of work
  • distribute the risks and costs more evenly across different types of projects
  • standardise descriptions of Construction Types and building classifications that are understandable and practical for users
  • make the pricing process more transparent for builders and homeowners and will empower homeowners to be more aware of the product they are covered under
  • make the net pricing across the HBCF scheme more stable, which will assist with keeping the scheme financially sustainable so it can continue to protect homeowners into the future.

We have merged the structural and non-structural categories and have stopped using land title as a basis for classifying construction types, meaning project applications will be easier to complete and faster to process.

The guidelines also confirm that HBCF Premiums will be calculated based on the building contract value only. The cost of the HBCF insurance (being the premium and any applicable taxes and insurance intermediary fees) is to be excluded when submitting a project application in HBCF systems.

The new Construction Types are detailed in Table 2 Construction Types of the HBCF Eligibility Manual (PDF, 1.1MB).

Premium rates for H0 Construction Types

Metro Base Rate

 Construction code Base rate excluding GST and stamp duty Base rate including GST and stamp duty
H01 New Dwelling Construction

Includes previously used category of C01 and C09 and some forms of C03

 0.886% 1.062%
H02 Building Work to an Existing Residential Apartment Building

Includes previously used categories C02 and C08

 6.177% 7.406%
H03 New Residential Apartment Building Construction

Includes previously used category C03

 5.310% 6.367%

H04 Building Work to an Existing Dwelling

Includes previously used categories C04 and C06

 0.859%  1.030%

H05 Swimming Pools

Includes previously used category C05

 0.490%  0.588%

Rural Base Rate

 Construction code Base rate excluding GST and stamp duty Base rate including GST and stamp duty
H01 New Dwelling Construction

Includes previously used category of C01 and C09 and some forms of C03

0.709% 0.850%
H02 Building Work to an Existing Residential Apartment Building

Includes previously used categories C02 and C08

4.942% 5.925%
H03 New Residential Apartment Building Construction 

Includes previously used category C03

4.248% 5.093%

H03 Building Work to an Existing Dwelling

Includes previously used categories C04 and C06

0.687% 0.824%

H05 – Swimming Pools

Includes previously used category C05

0.392% 0.470%

Note: Rates in the table above are for rural areas A 20% discount applies.

Minimum premiums

A minimum premium of $200 applies to all projects. 10 per cent GST and a 9 per cent stamp duty are applicable to HBCF premiums. Where the contract price for a residential construction project is not known, the reasonable market cost of the labour and materials involved in the project is used to calculate the applicable premium.

How risk-based pricing works

Based on HBCF insurance claims data, some characteristics have greater potential to increase the incidence of insolvency. These characteristics are weighted for each builder to provide the premium loading or discount, which is then applied to the base premium for the type of work being undertaken.

For example, incorporated entities (companies) have a significantly greater frequency of claims over sole traders and partnerships. This is reflected in the premium icare charges.

Other attributes taken into account as part of the risk-based approach include the period the entity has been licensed, retained (adjusted) net tangible assets and net profit.