Compulsory before you take a deposit.
Different in every state.

Home warranty insurance, also called builder indemnity or domestic building insurance depending on where you are, protects homeowners against financial loss when a builder defaults on residential building work. The builder takes out the policy and pays the premium, then passes the cost to the owner, but the owner is the beneficiary, not the builder. Cover normally extends to any later purchaser within the cover period.

In most Australian jurisdictions the cover is structured as last resort. The homeowner has to pursue the builder first, and the scheme answers only where that fails. The common trigger events are the builder dying, disappearing or becoming insolvent, and some schemes add a failure to comply with a tribunal or court order. Queensland is the main exception: its scheme sits closer to a first-resort statutory scheme, responding to contractor default and defects more generally, while Victoria, South Australia and Western Australia are strictly last resort.

The detail that catches builders out is timing. In most states the certificate of insurance has to be in place before you start work or take any money, including a deposit. Starting work or accepting a deposit beforehand is an offence in several jurisdictions, not just a paperwork slip. It is also worth keeping two documents straight: a certificate of eligibility (your approval to buy cover) is not the same as a certificate of insurance for a specific job, and one cannot stand in for the other.

Last resort is narrower than it sounds

Because the cover answers only on death, disappearance or insolvency, it does not assist in an ordinary dispute where the builder is solvent and contactable. In those cases the builder remains directly liable, and the policy does not respond. That is worth being plain with clients about, so nobody mistakes a warranty certificate for a guarantee against every disagreement.

The scheme in each state, at a glance

Three things separate one jurisdiction from the next: what the scheme is called, whether protection arrives as an insurance product the builder has to buy or as statutory warranties that attach to the contract automatically, and how long cover runs. Read those three together, because a six-year statutory warranty and a six-year insurance policy with a dollar limit behind it are not the same protection.

• NSW, Home Building Compensation (HBC) insurance. An insurance product, administered by icare under the Home Building Compensation Fund. A homeowner claims where the builder caused incomplete or defective work and a trigger event has occurred: death, disappearance, insolvency, or licence suspension for non-payment of a tribunal or court order. The eligibility material behind this guide sets the threshold and the certificate rules but does not state the structural and non-structural cover periods, so confirm those with icare rather than assuming NSW matches Victoria. See NSW HBCF eligibility.
• Victoria, Domestic Building Insurance (DBI). An insurance product, issued by the Building and Plumbing Commission, and last resort under the policy wording applying to certificates issued from 1 July 2025. Non-structural defects are covered until two years after completion or termination, whichever is earlier. All other loss, including structural defects, is covered for six years on the same basis. See Victorian DBI.
• Queensland, the Home Warranty Scheme. A not-for-profit statutory insurance scheme administered by the QBCC, operating closer to first resort. Structural defects are covered for six years and six months from cover commencement. Non-structural defects are covered for six months from substantial completion, far shorter than builders arriving from other states expect. Overall cover runs six years and six months from commencement, extendable by six months to a maximum of seven years where the work runs longer than six months. See Queensland home warranty.
• South Australia, Building Indemnity Insurance (BII). An insurance product, compulsory under the Building Work Contractors Act 1995 and strictly last resort. It covers rectification of defective work for up to five years after completion, for the original owner and any subsequent owner. See SA building indemnity insurance.
• Western Australia, Home Indemnity Insurance (HII). An insurance product under the Home Building Contracts Act 1991, taken out in the owner’s name and strictly last resort. Cover applies during the construction period and for six years from practical completion, and the benefit passes to a subsequent owner who buys within that period. See WA home indemnity insurance.
• ACT, residential building insurance plus statutory warranties. Both mechanisms apply. For work over $12,000 on some residential buildings the builder must hold a residential building insurance policy or a fidelity certificate before work starts, and separately, statutory warranties attach to residential work over $12,000 whether or not the contract says so. The ACT material states that structural and non-structural warranty periods differ but does not put numbers on them, so confirm the current periods with the scheme before relying on them. See ACT home warranty.
• Tasmania, statutory warranties only. No mandatory insurance product of the kind the other states run. Statutory warranties form part of every residential building contract automatically, last six years from practical completion, and transfer to a new owner if the dwelling is sold within that period. See Tasmanian home warranty.

The Northern Territory runs a mandatory scheme as well, delivered as a fidelity fund certificate rather than an insurance policy. It is set out in full below.

How it differs by state

The figures below are drawn from official scheme materials current at the dates noted. Treat them as indicative of how each scheme is shaped, and confirm the current thresholds, limits and periods with the relevant scheme before relying on them, because they change.

• NSW, Home Building Compensation Fund (HBCF). Administered by icare. A Certificate of Insurance is required for residential work over $20,000 including GST, purchased before work starts and before any money, including a deposit, changes hands. Before buying certificates a builder needs a Certificate of Eligibility, which sets Open Job Limits, the value and number of jobs you can have under construction at once. A variation greater than 20 per cent of the original price triggers a premium adjustment. (As at Eligibility Manual v12, March 2026.)
• Victoria, Domestic Building Insurance (DBI). Issued by the Building and Plumbing Commission, with the policy wording applying to certificates issued from 1 July 2025. Last-resort cover on four triggers: the builder has died, disappeared, become insolvent, or failed to comply with a tribunal or court order. The aggregate limit is $300,000 per home, non-completion is capped at 20 per cent of the contract price, structural defects are covered for six years and non-structural defects for two.
• Queensland, Home Warranty Scheme. A statutory scheme administered by the QBCC, covering residential work over $3,300 and operating closer to first resort. Standard cover is $200,000 per category of loss, with optional cover lifting that to $300,000. Structural defects are covered for six years and six months. The licensed contractor collects and pays the premium, usually within the deposit, before work starts. (As at the QBCC product disclosure, contracts from 28 October 2016.)
• South Australia, Building Indemnity Insurance (BII). Compulsory under the Building Work Contractors Act 1995 for major domestic building work, triggered at a contract value of $12,000 or more where the work needs development approval. Last-resort cover for death, disappearance or insolvency, plus rectification of defects for up to five years. The policy limit is commonly $150,000 per project. A 2025 government review flagged the low attachment point and the absence of deposit protection as gaps.
• Western Australia, Home Indemnity Insurance (HII). Governed by the Home Building Contracts Act 1991 and required for residential work valued over $20,000. Last-resort cover during construction and for six years from practical completion. The policy pays up to $100,000, or the contract value if less, plus up to $20,000 for a lost deposit. Failing to take out HII when required can be prosecuted and fined. (As at the 2017 Building Commission bulletin.)
• ACT, residential building insurance. For work over $12,000 on some residential buildings, the builder must hold a residential building insurance policy or a fidelity certificate before work starts, and the owner should get a copy. Cover for deposits is limited to $10,000. Separately, statutory warranties apply to residential work over $12,000 whether or not they are written into the contract.
• Tasmania, statutory warranties (no mandatory insurance product). Tasmania does not run a compulsory home warranty insurance scheme of the kind in other states. Consumer protection rests on statutory warranties that automatically form part of every residential building contract, run for six years from practical completion, and pass to a new owner if the home is sold within that period, with disputes escalating through Consumer Building and Occupational Services and the Tasmanian Civil and Administrative Tribunal.
• Northern Territory, residential building cover (fidelity fund certificate). Contrary to a common assumption, the NT does run a mandatory scheme, delivered as a fidelity fund certificate under the Building Act 1993 and required for prescribed residential work over $12,000. The builder must hold it before a building permit is granted and before demanding payment. It responds if the builder becomes bankrupt, dies, disappears or has registration cancelled, with total cover of $200,000 across non-completion and defects, non-completion capped at 20 per cent of the contract price, and structural defects covered for six years. (As at the NT.GOV.AU and Fidelity Fund NT materials, mid 2026.)

How long does cover run, and when does the clock start?

The common shape is two years for non-structural defects and six years for structural defects. Victoria uses exactly that split. Western Australia runs six years from practical completion, and Tasmania’s statutory warranties run six years from practical completion as well. Two things vary enough to catch people out.

The first is that the common shape is not universal. Queensland covers non-structural defects for six months from substantial completion rather than two years, and South Australia covers rectification for up to five years after completion rather than six.

The second, and the one builders most often get wrong, is when the period starts. Six years from practical completion and six years from a commencement date fixed before site start are very different amounts of protection. Queensland’s six years and six months for structural defects runs from cover commencement, not from handover, so part of it is consumed during construction. Western Australia’s six years runs from practical completion, so the whole tail sits after the owner moves in. On a job with a long approvals run, the difference between those two starting points is a meaningful slice of the cover the owner thinks they have.

Victoria is the scheme most people are searching for, and it sits on the other side of that line: both Victorian periods run from completion or termination, whichever is earlier, so the full six years of structural cover stands after handover. Our Victorian DBI guide sets out the limits, the excesses and the periods, and answers the six-versus-seven question directly.

It is also worth knowing where the seven-year figure comes from, because it tends to get attached to the wrong state. Queensland’s overall cover can extend to a maximum of seven years where the work runs longer than six months. In Western Australia, seven years is the window in which an owner-builder who sells must have cover in place, and the period for which a registered builder selling a home built under the once-every-six-years exemption must provide cover to the subsequent owner. Neither of those is a Victorian period.

What it costs, and what drives the premium

Premium is a separate question from cover, and there is no single rate. It moves with the scheme, the contract value and the job, and in states where eligibility is assessed on your financials it moves with your own assessment, which is why two builders pricing the same house can pay different premiums. Contract changes can move it after cover is issued: in NSW a variation greater than 20 per cent of the original price, up or down, must be notified and triggers an additional premium or a refund.

The full breakdown of what drives the number sits on its own page. See the cost of builders warranty insurance.

This guide covers every state and territory: New South Wales, Victoria, Queensland, South Australia, Western Australia, the ACT, Tasmania and the Northern Territory. Each runs its own scheme with different triggers, thresholds, limits and periods, so confirm the current rules for the jurisdiction you are building in. Everything above is general information for builders, not legal, insurance or financial advice.

Software does not issue cover, set your limit or underwrite you. The schemes and their insurers do that. What construction software can do is keep the inputs around the cover honest and visible, so the cover keeps pace with the job and the financial picture behind an assessment reflects the real business.

Three things matter in practice. Contract value and variations tracked live, so you can see when a job is approaching a threshold or, in NSW, the 20 per cent variation mark that changes the premium. The certificate and any prescribed notices kept against the job, so the right document is on hand when the owner or the permit authority needs it. And, where eligibility turns on your financials, current cost, real work-in-progress and clean books, so the business presents its true strength to an assessor rather than looking weaker on paper because the data was stale. That financial picture is also what sets your Open Job Value, the ceiling on how much work you can carry at once.