The Home Building Compensation Fund (HBCF) provides a safety net for home owners in NSW faced with incomplete and defective building work carried out by a builder or tradesperson.
Licensed contractors that take on residential work over $20,000 need insurance cover through HBCF. They must obtain this cover before starting any work or taking any money under the contract, including the deposit.
We undertake a risk assessment of builders and tradespeople to determine their eligibility to obtain insurance cover. Certificates of Eligibility set out how much work a contractor can take on.
Once a builder or tradesperson has eligibility, they can apply for a Certificate of Insurance for individual projects which they contract to do.
What the HBCF covers
A Certificate of Insurance issued by icare HBCF compensates homeowners for losses arising from defective and incomplete work where the builder or tradesperson:
- becomes insolvent
- has their building licence suspended by NSW Fair Trading due to non-compliance with a money order made in favour of the homeowner by the NSW Civil and Administrative Tribunal or a court.
A HBCF policy provides cover for:
- Failure to commence work: loss of deposit under the building contract, claimable for up to 12 months from the failure to commence.
- Failure to complete work: up to 20% of the contract price (including any variations), claimable for up to 12 months from the cessation of work.
- Major defects: the cost of repair, claimable for a period of up to 6 years from completion of the work. If the homeowner becomes aware of the defects in the last 6 months of the period of insurance, they may claim within 6 months of awareness of the defect(s).
- For non-major defects: the cost of repair, claimable for a period of up to 2 years from completion of the work. If the homeowner becomes aware of the defects in the last 6 months of the period of insurance, they may claim within 6 months of awareness of the defect(s).
- When a homeowner becomes aware of a loss becomes during the period of insurance but a claim cannot be made because the builder can still be pursued, a claim can be made after the period of insurance if the loss suffered is properly notified to icare HBCF during the period of insurance and the homeowner diligently pursues the enforcement of their statutory warranty rights up to the point where a trigger event occurs under the policy and the homeowner makes a claim.
The policy provides a maximum cover per dwelling of:
- $300,000, if issued before 1 February 2012
- $340,000 for all other policies.
The cover extends to subsequent purchasers of the property (as long as the policy has not been exhausted by a prior claim).
Full terms and conditions are as set out in the policy applicable to an individual property.