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.

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.

This guide covers New South Wales, Victoria, Queensland, South Australia, Western Australia, the ACT and Tasmania. The Northern Territory is not covered here and should be checked separately. 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.