Residential building work insurance

Building work on houses and apartment buildings which are three storeys and below, not including a car park must be covered by residential building work insurance.

This is sometimes called home warranty insurance or builder’s warranty insurance.

This insurance is an important consumer protection.

Insurance is provided either by an authorised insurer or by an approved fidelity fund scheme.

Authorised insurers

An authorised insurer is a body corporate authorised to carry on insurance business under the Insurance Act 1973 (Cwlth).

Currently QBE Insurance is the only authorised insurer who provides residential building work insurance in the ACT.

Approved Fidelity Fund Schemes

The Master Builders Fidelity Fund is currently the only approved fidelity fund scheme under the Building Act 2004.

The Master Builders Fidelity Fund is a private sector managed not-for-profit enterprise. It is not a government business, though the ACT Government has a regulatory oversight function.

Review of residential building work insurance

In 2024, the ACT Government finalised a review of the ACT’s rules around residential building work insurance.

Key parts of the review included the minimum insurance amount, the time limits to lodge a claim and the period of insurance.

The final Review of Residential Building Work Insurance Regulatory Settings report made 12 recommendations and these were recently agreed to by Government with the report tabled in the Legislative Assembly in June 2024.

The recommendations included:

• Recommendation 9: Increase the minimum insurance amount, which is currently set at $85,000, to an amount which considers current building costs and contracting practices.
• Recommendation 10: Increase the period to lodge a claim to improve consumer protection.

From 1 January 2025, the minimum insurance amount will be increased from $85,000 to $200,000 and the time limit to lodge a claim will increase from 90 days to 180 days.

Work is progressing in relation to the other recommendations. Further information will be provided as that work progresses and is completed.

Some recommendations have already been completed through amendments included in the Building and Construction Legislation Amendment Act 2023 in response to the review’s interim report. These amendments are outlined in the attached final report. These amendments will commence later this year.

Who can provide insurance?

Insurance must be:

• an insurance policy issued by an authorised insurer in accordance with section 90 of the Building Act 2004, or
• a fidelity certificate issued by an approved fidelity fund scheme in accordance with the approval criteria for a fidelity fund scheme.

Who is responsible for obtaining the insurance?

The builder. This must be done before applying to the certifier for a building commencement notice and starting building work. The builder must also provide the owner with evidence of the insurance. If you are engaging a builder, you should check that all details on the insurance policy or fidelity fund certificate are complete and accurate, including the cost of the work and the builder's name.

Who does the insurance cover?

The insurance covers the current owner and future owners should the building be sold to another party.

When does the time limit to make a claim commence?

The time limit commences when the homeowner becomes aware that the builder has become insolvent, died or disappeared.

What is the role of the building certifier?

If residential building work requires insurance, the building certifier must check insurance is in place before the certifier can issue a building commencement notice to the builder.

Complaints and disputes

If there is a dispute between you and your builder or other professional, there are options for you to resolve your dispute or make a complaint.