Building and trades contractors must take out insurance under the home building compensation fund for each residential building project if the contract price is over $20,000, inclusive of GST (with some exceptions).
If not they could be liable for financial penalties up to $110,000 for the first offence and $55,000 and/or a maximum of 12 months imprisonment or both for second or subsequent offences.
Homeowners need to be covered in case their contractor is unable to finish a project, or cannot fix defects due to the builder dying, becoming insolvent or disappearing.
In the home building industry, NSW Fair Trading regulates builder's compliance with insurance requirements. Both homeowners and insurers can report fraud, uninsured or under-insured work to NSW Fair Trading, which will address the matter through their complaints assessment process. As a result of the complaint, NSW Fair Trading may then undertake an investigation.
Get a policy
Insurance under the home building compensation fund is currently provided exclusively by the NSW Government's insurer: icare.
First, you need to obtain insurance eligibility via a broker on icare's broker panel. A certificate of eligibility means you've been assessed as satisfying icare's requirements to undertake work over $20,000 in value, which requires home building compensation insurance.
Once you have eligibility, it entitles you to apply for insurance certificates (also called project certificates). Your eligibility may include limits about the type and amount of work for which you may purchase insurance.
You can find out more on the icare website.