As a provider in the NSW home building compensation scheme, icare HBCF provides a safety net for homeowners in NSW faced with incomplete and defective building work carried out by licensed builders and contractors, for residential building work over $20,000.
We do this by carrying out a risk assessment of builders’ and contractors’ eligibility to obtain insurance cover. Certificates of Eligibility set out how much work a contractor can take on.
Once a builder or contractor has eligibility with a provider, they can apply to that provider for a Certificate of Insurance for individual projects which they contract to do.
Home Building Compensation scheme cover is compulsory
Reference to builders and building work includes and applies to work done by trade contractors and other building contractors such as electricians, plumbers, carpenters, swimming pool builders etc.
Builders and contractors are required to provide evidence of cover (for example, icare HBCF will issue a Certificate of Insurance) to the homeowner before starting any work or accepting any money, including a deposit.
Applications to icare HBCF for a Certificate of Insurance can only be made once a builder or contractor has a certificate of eligibility. As a builder or contractor, your certificate of eligibility determines the maximum value and number of construction projects you can have open at any given time. It also certifies the maximum contract price for each type of construction work you’re eligible to do.
Information for your customers
The fact sheet (below) contains essential information every homeowner needs to know about icare HBCF. It explains who we are, what we do, what a homeowner is covered for and the claims process.
We suggest you print this fact sheet and give a copy to your homeowner customers when you start a new project with them.
Applying for eligibility through a broker distributor
Only brokers who are approved as icare HBCF distributors can act on behalf of builders and contractors in applying to icare HBCF for eligibility and Certificates of Insurance for jobs.
Approved distributors act as a builder’s advocate in dealing with our Eligibility Risk Manager, Corporate Scorecard. The distributor will ensure that complete and accurate information is submitted on your behalf so that the Eligibility Risk Manager can make a fully informed decision when undertaking its risk assessment.
We currently work with Corporate Scorecard, our Eligibility Risk Manager to undertake eligibility risk assessments for HBCF insurance.
The Eligibility Risk Manager manages the risk assessment functions on behalf of HBCF.
Applying for a certificate of insurance through a broker distributor
Where eligibility for insurance with icare HBCF has been approved, the distributor can then process applications for Certificates of Insurance for individual projects on your behalf.
You must obtain a certificate for each project that you undertake before it begins, and before you receive any payment (including a deposit) under the building contract.
You just need to submit your project application to your broker, who will issue you a Certificate of Insurance on behalf of HBCF (assuming all requirements are met).
Eligible builders and contractors can also make an application online through our Builder Self-service Portal.
Your role as an HBCF approved broker distributor
Since 1 October 2017, HBCF has had a fixed panel of broker distributors selected based on an open tender process.
A broker distributor's primary role is to manage the application process on behalf of a builder. You must also communicate HBCF’s requirements and decisions with builder clients clearly and in a timely manner.
You are required to:
- at all times, act towards icare HBCF with the utmost good faith
- assist in obtaining information that is necessary for the Eligibility Risk Manager to conduct risk assessments
- avoid unnecessary disruption to projects due to commencement and identify such concerns to the Eligibility Risk Manager as required
- provide clients with clear requests for further information and ensure that they have the understanding as to why further information is required
- disclose all matters material to an eligibility assessment in your possession and knowledge.
You should not:
- attempt to influence decisions of the Eligibility Risk Manager by reference to the overall and/or particular business relationships between yourself and the Eligibility Risk Manager
- knowingly advocate to builders to seek a lesser amount of eligibility, which may later require an increase.
The introduction of risk-based pricing means building contractors are offered premium prices that reflect their individual level of risk. This will reduce the subsidisation of higher-risk contractors by their lower-risk counterparts.
Risk-based pricing also provides an incentive for building contractors to reduce their risk to obtain lower insurance premiums, thus providing better premium prices to homeowners.
The first change to pricing commenced on 3 April 2017 and the second on 3 October 2017. This included new base rates and the introduction of builder risk- based pricing. There will be further premium increases in 2018.
Removal of commissions
icare HBCF has ceased paying commissions to broker distributors effective from 3 April 2017.
This change has brought the HBCF in line with icare Workers Insurance which does not pay commissions.
Broker distributors have adopted a fee-for-service model where they now charge builders with competitively-set fees.
Broker distributors’ fees will be separate to the premium paid for HBCF insurance.
Broker distributors decide how much they charge for their services independently and it is a matter between the broker distributor and their builder clients.