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What insurance do builders need?

Written by COVRA · Updated · Sources

Builders commonly insure the works they’re building (contract works), public liability, vehicles and tools, and workers’ compensation if they employ staff. The law requires home warranty insurance on residential work over a set amount in every state and territory except Tasmania, and most building contracts ask for contract works and public liability.

What builders commonly insure.

The covers builders most often look at. What applies depends on your state, your licence and your contracts.

  • Contract works Loss of or damage to the works and materials until handover, such as from theft, vandalism, fire or storm. Most building contracts require it1.
  • Public liability Injury to other people and damage to their property. Most building contracts require it too1, and the Building Commission NSW warns homeowners they could be liable if their builder has none2.
  • Home warranty Required for residential work over a set amount in every state and territory except Tasmania. The builder takes it out for the owner (see below).
  • Utes, vans and trucks Damage to your vehicles and to other people’s.
  • Yard, office or workshop Buildings, contents and stock at your own premises.
  • Workers’ compensation Compulsory for most employers. It doesn’t cover sole traders3. Subcontractors can count as your workers in some states (see below).
  • Professional indemnity For NSW registered building practitioners from 1 July 2027, and Queensland’s builder—project management services licence4, 5.

Licence and registration rules.

What builders must hold to be licensed or registered, beyond home warranty, and when a subbie counts as your worker.

  • NSW: apartment work Builders who do or oversee work on class 2 buildings (apartments), and some class 3 and 9c buildings, must register as building practitioners even if they hold a building licence6. Their exemption from holding professional indemnity insurance ends on 30 June 20274.
  • Queensland Professional indemnity is a licence requirement for the builder—project management services class5.
  • Victoria From 1 July 2026, domestic builders must meet Minimum Financial Requirements, which set how much work they can carry out at once7. Public liability is a registration requirement only for demolishers and temporary structure erectors: $5 million, or $10 million for unlimited demolition8.
  • Tasmania $5 million public liability, and evidence of contract works insurance at application and renewal9.
  • SA: subcontractors Building work other than wall and floor tiling is a prescribed class. A subbie counts as your worker if they work personally, employ no one on the job, supply materials worth no more than 4% of the contract price or $165 in 2026 (whichever is greater), and own no tools or plant above an indexed value. If a subbie who employs staff isn’t registered with ReturnToWorkSA, you’re taken to be their workers’ employer10.

Home warranty by state.

Who provides it, when it pays and how much. The thresholds for each state are on our tradie insurance page.

  • NSW icare’s Home Building Compensation Fund, a last resort. It pays if the builder becomes insolvent, dies, disappears or loses their licence for not paying a court or tribunal order. Major defects are covered for 6 years and other defects for 2, up to $340,000 per certificate11, 12. Only the principal contractor can take it out, before taking any money or starting work, and a company that doesn’t faces a penalty of up to $110,00013.
  • Victoria The Building and Plumbing Commission, for contracts from 1 July 2026. It can pay when the builder is unable or unwilling to finish or fix the work. Up to $400,000 per home, with incomplete work capped at 30% of the contract price. Major defects are covered for 6 years and other defects for 214. The builder pays the premium within 10 business days of signing, or before work starts if that’s sooner15.
  • Queensland The QBCC. It pays if the contractor doesn’t or can’t finish the work, doesn’t fix defects, or the building suffers subsidence, for 6 years and 6 months16. Up to $200,000 for each category of loss, or $300,000 with optional cover17. The builder collects the premium as part of the deposit1.
  • WA Private insurers approved by the Minister, chosen by the builder. It pays if the builder dies, disappears, becomes insolvent or loses registration for failing financial requirements. Up to $200,000, plus up to $40,000 for a lost deposit, for 6 years from practical completion18.
  • SA Building indemnity insurance from QBE, reinsured by the state’s financing authority (SAFA), or from Assetinsure, or AB Phillips for pools, spas and landscaping. It pays if the builder dies, disappears or becomes insolvent, up to $250,000 on new policies, and defects can be claimed up to 5 years after completion19.
  • ACT An authorised insurer (currently only QBE) or the Master Builders Fidelity Fund. Minimum cover has been $200,000 since 1 January 2025, and claims follow the builder’s insolvency, death or disappearance20.
  • NT A fidelity fund certificate from Fidelity Fund NT, the only provider. It covers owners if the builder becomes bankrupt, dies, disappears or has their registration cancelled, including structural defects for 6 years after completion21.
  • Tasmania No scheme yet. While one is developed, a Financial Assistance Package pays up to $200,000 where a builder has died, disappeared or entered voluntary administration since 1 July 202122.
Costs

How much does builders insurance cost?

We found no contract works premium published by an insurer or established broker. These are published figures for a builder’s package of covers and for home warranty. A guide, not a quote.

Builders, all covers $143 a month

Average business insurance premium. BizCover, 2025–26.23

Home warranty, NSW new home 1.158%

Of the contract price: icare’s base rate for Sydney, Newcastle and the Central Coast, with GST and stamp duty, from 1 November 2025.12

Home warranty, Qld new home $5,142.25

For work insured up to $500,000, including GST. QBCC premium table.24

Home warranty, Qld renovation $899.80

For work insured up to $100,000, including GST. QBCC premium table.25

icare applies a loading or discount to its base rate for each builder’s risk profile, and rural projects get a 20% discount12. QBCC premiums rise in $1,000 steps of insurable value, from its tables effective 1 July 202024, 25.

Contract works policies.

Cover for the job itself, written for one project or for a year. The terms that can leave a job uninsured.

  • Project or annual Construction works cover can be arranged for each project, or as an annual policy with the premium based on turnover. Master Builders Queensland says there’s no standard policy, and cover varies a lot between insurers26.
  • Construction period Policies set a maximum time to complete a project, typically 12 months according to HIA. If a job runs over, it may no longer be covered27.
  • Sites on hold A cessation of works clause limits how long a site can sit idle, such as 30 days. HIA tells members to keep records of activity on site in that time, even a security check27.
  • Building out of order HIA’s example: fitting out the interior before the cladding is on could let an insurer deny a rain damage claim for not taking reasonable care27.
  • Who it protects The Building Commission NSW describes contract works as protection for the homeowner too, covering loss of or damage to materials and work2.

Real claims.

Decisions from the Australian Financial Complaints Authority (AFCA) and claims published by BizCover for Brokers. We found no published AFCA decision on a builder’s contract works or public liability claim. Every claim depends on the policy wording.

  • ExcavationA tradesperson ruptured a high-pressure gas main while excavating and was prosecuted. The charges were dropped, and management liability paid $70,000 in legal costs28.
  • Drilling contractorTools and equipment worth $43,504 were stolen from a trailer on a job site while a subcontractor had charge of it. AFCA upheld the decline, as the policy excluded equipment in someone else’s care, custody or control29.
  • BuilderA builder and window fixer with hip osteoarthritis could no longer do manual work but kept working as a project manager. AFCA upheld the decline of the total and permanent disability claim, as the builder could still do part of their own occupation30.
  • CarpenterClaimed personal accident and sickness benefits after tonsil tissue left from an earlier operation regrew and became infected. AFCA upheld the decline under the pre-existing condition exclusion31.
  • Landscape contractorDamaged cables while excavating. The $903 claim was declined because the policy required cable locations to be checked with the authorities first, and they weren’t32.
FAQ

Common questions.

Is contract works insurance compulsory?

No law requires it in most states, but most building contracts do. Tasmanian builders must show evidence of it to be licensed.

Who pays for home warranty insurance?

The builder takes it out on the owner’s behalf and pays the premium, which can be built into the contract price. In Queensland the premium is collected from the owner with the deposit.

When does home warranty insurance pay out?

In NSW, WA, SA, the ACT and the NT, only if the builder dies, disappears, becomes insolvent or, in some states, loses their licence or registration. In Victoria and Queensland it can also pay when the builder doesn’t finish the work or fix defects.

How much does home warranty insurance cost?

It depends on the state and the job. QBCC’s table puts a new home insured up to $500,000 at $5,142.25, and icare’s base rate for a new home in Sydney is 1.158% of the contract price, before the builder’s own loading or discount.

Do subcontractors need home warranty insurance?

Not in NSW. Only the principal contractor can take out the cover, and subcontractors working for a licensed contractor are exempt.

Do builders need professional indemnity insurance?

Registered building practitioners in NSW will need it from 1 July 2027, and Queensland requires it for the builder—project management services licence.

Can a subcontractor count as my worker?

In some states. In SA, a subbie doing building work personally, employing no one on the job and supplying few materials is treated as your worker.

How long does contract works cover last?

For each job, until handover, within the policy’s maximum construction period. HIA says that period is typically 12 months.

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Who requires cover.

  • Residential builders New homes, and the home warranty that goes with them
  • Renovation builders Extensions, alterations and repairs
  • Commercial builders Head contracts, fit-outs and apartment work
  • Carpenters and subcontractors Working under a principal contractor

Covers builders look at.

Our guides to the covers builders most often ask about.

Public Liability Insurance Business Motor Insurance Professional Indemnity Insurance

Sources.

  1. Insurance responsibilities, QBCC, 26 June 2025
  2. Insurance requirements for contractors working on your home, Building Commission NSW
  3. Types of business insurance, business.gov.au
  4. Update on amendments to building regulations, Building Commission NSW, 26 June 2026
  5. Professional indemnity insurance, QBCC, 11 June 2026
  6. Building practitioner obligations when working on regulated buildings, Building Commission NSW, 8 September 2026
  7. Home Warranty and financial requirements: what builders need to know, Building and Plumbing Commission (Vic), 20 August 2026
  8. Insurance requirements for registration, Building and Plumbing Commission (Vic), 3 July 2026
  9. Builder licence, CBOS Tasmania, 12 August 2026
  10. Building work: a guide to deemed workers, ReturnToWorkSA, 2026
  11. What does HBCF cover?, icare
  12. HBCF premium guidelines, icare
  13. Insurance obligations for residential building work, SIRA (NSW), July 2026
  14. What Home Warranty may cover, Building and Plumbing Commission (Vic), 30 June 2026
  15. Paying the premium and notice of cover, Building and Plumbing Commission (Vic), 30 June 2026
  16. What is home warranty insurance, QBCC, 11 May 2025
  17. Maximum amounts covered, QBCC, 25 October 2021
  18. Home indemnity insurance fact sheet, WA Government, November 2025
  19. Building indemnity insurance, SAFA (SA)
  20. Residential building work insurance, ACT Planning
  21. Fidelity fund certificate, NT Government, 2026
  22. Financial Assistance Package for consumers affected by construction failures, CBOS Tasmania, 27 July 2026
  23. Insurance for builders, BizCover, 2026
  24. Home warranty premium table: new home construction, QBCC, 1 July 2020
  25. Home warranty premium table: renovations and alterations, QBCC, 1 July 2020
  26. Construction works and public and products liability insurance, Master Builders Queensland
  27. Building delays could void your insurance, HIA, 7 May 2026
  28. Management liability claim: tradesperson, BizCover for Brokers
  29. Determination 12-24-182154, AFCA, 8 January 2026
  30. Determination 12-00-1059131, AFCA, 30 April 2025
  31. Determination 12-25-186646, AFCA, 4 December 2025
  32. Business pack claim: landscape construction, BizCover for Brokers