HBCF premium guidelines
We use risk-based pricing, meaning builders will pay a premium based on their insurance risk profile.
- 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 Premium Base Rates from 1 July 2023
In October 2022, icare reduced construction types from nine to five. This was to align with the guidelines the State Insurance Regulatory Authority (SIRA) published for managing HBC insurance premiums and eligibility. With the construction type changes came new base rates for each of the five construction types.
To ensure the scheme remains financially sustainable and can continue to protect NSW homeowners, we are making some adjustments to the premium base rates. Following a premium filing submission to SIRA, these premium rate changes will come into effect on 1 July 2023.
What's changed?
- For H01, H04 and H05: there is no change in base rates
- For H02: a reduction in base rates reflecting changes in the claims performance of this premium category
- For H03: an increase in base rates reflecting changes in the claims performance of this premium category.
As icare continues to monitor the performance of the new premium categories, further rate movements may be required to reach sustainable rates in the future.
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 |
5.395% | 6.469% |
|
H03 – New Residential Apartment Building Construction
Includes previously used category C03 |
5.477% | 6.567% |
|
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 |
4.316% | 5.175% |
| H03 – New Residential Apartment Building Construction
Includes previously used category C03 |
4.382% | 5.254% |
|
H04 – 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.