Builders Insurance NSW: Home Warranty (HBCF) and Costs

What insurance do builders need in NSW?

Written by COVRA · Updated 1 October 2026 · Sources

NSW builders must hold home building compensation cover (HBCF, also called home warranty insurance) on residential work worth more than $20,000, before starting work or taking a deposit. Most employers must hold workers’ compensation. Contract works and public liability aren’t required by the Home Building Act, but Building Commission NSW’s standard contracts ask for both. Our builders insurance page explains what each cover is.

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What’s compulsory, and what contracts ask for.

Two insurances are required by NSW law today. The others come from contracts, and from registration for apartment work.

Cover	Required by	When
Home building compensation (HBCF)	Law	Residential building work with a contract price over $20,000, including GST^{1, 2}
Workers’ compensation	Law	Employers, unless wages are $7,500 or less a year, there’s no apprentice or trainee, and the business isn’t part of a group³
Public liability	Contracts	Building Commission NSW’s standard contracts ask for at least $5 million^{4, 5}
Contract works	Contracts	Its contracts ask for cover of the full cost of reinstating the work, plus at least 10% on jobs over $20,000^{4, 5}
Professional indemnity or similar	Registration	From 1 July 2027, registered building practitioners on apartment and similar work must be adequately insured^{6, 7}

Home building compensation (HBCF).

NSW’s home warranty insurance, also searched for as builders warranty insurance. icare is the only insurer⁹. The builder buys a certificate for each job, and it pays the owner only as a last resort.

When it applies Residential building work with a contract price over $20,000, including GST^{1, 2}. Contracts between the same parties for the same job are added together^{1, 8}.
Before work or money The builder must hold the cover, and give the owner the certificate of insurance, before starting work or taking any payment, including a deposit^{1, 9}.
Who insures Only the principal contractor, in the name on the contract. That includes a trade contractor who contracts with the homeowner. Subcontractors don’t insure, whatever their contract is worth⁸. A contractor hired directly by an owner-builder is the principal contractor for that work, and insures it if it’s over $20,000¹.
Eligibility comes first A builder needs a certificate of eligibility from icare before buying cover for a job. It sets the types of work, the value of each job and how many jobs can be open at once¹⁰. New builders get a maximum of $1.5 million in open jobs¹¹.
How to get it Builders can manage HBCF cover themselves in icare’s portal. Using a service provider, such as a broker or accountant, is optional¹².
Main exemption Building a new block of more than 3 storeys with 2 or more dwellings^{2, 13}. Renovating one isn’t exempt⁹. SIRA lists other exemptions, such as built-in furniture done under its own contract¹³.
What it pays the owner Only if the builder becomes insolvent, dies, disappears, or has their licence suspended for not paying a court or tribunal order¹⁴. At least $340,000 of cover for each dwelling, and non-completion claims can be limited to 20% of the contract price².
Time limits Major defects are covered for 6 years from completion and other loss for 2 years. No claim can be made more than 10 years after completion¹.
If you don’t insure A penalty of up to $110,000 for a company and $22,000 otherwise^{1, 8}. The builder can’t enforce the contract for that work, though a court can allow payment for the work’s value if it thinks that fair¹, and can’t make a security of payment claim⁹.
Audits In an audit finished in April 2025, SIRA picked 100 businesses building houses, duplexes and granny flats using data-matching, and found 55 hadn’t met their insurance obligations¹⁵.
Under review A government review of the fund, announced in August 2024, covers whether the $340,000 is still enough¹⁶. We found no published outcome as at 1 October 2026.

Costs

How much is HBCF insurance?

icare’s base rates from 1 November 2025, as a share of the contract price, including GST and stamp duty. A guide, not a quote.

New home, Sydney 1.158%

Of the contract price. Also Newcastle and the Central Coast.¹⁷

New home, regional NSW 0.927%

Of the contract price, after the 20% regional discount.¹⁷

Renovation, Sydney 1.111%

Building work to an existing home.¹⁷

Swimming pool, Sydney 0.596%

Of the contract price.¹⁷

icare then applies each builder’s own loading or discount, capped at 30% either way¹⁸. At the base rate, a $500,000 contract for a new home in Sydney comes to about $5,790. icare’s calculator shows a minimum premium of $239.80, including GST and stamp duty, so small jobs cost more than the percentage suggests³⁴. icare’s rates changed on 1 November in both 2024 and 2025^{15, 17}.

HBCF premium rates.

icare’s base rates by type of work, including GST and stamp duty. The builder pays icare when applying for each certificate¹⁹, and the contract must state the cost of the cover¹.

Type of work	Sydney, Newcastle, Central Coast	Regional NSW
New home	1.158%	0.927%
Work to an existing home	1.111%	0.889%
Swimming pool	0.596%	0.477%
Work to an existing apartment building	4.935%	3.948%
New apartment building (up to 3 storeys)	13.503%	10.803%¹⁷

What NSW contracts ask for.

Building Commission NSW publishes standard home building contracts. Builders can use their own or an industry association’s instead²⁰.

Public liability Not less than $5 million, in the contract for work over $20,000 and the one for work over $5,000 and up to $20,000^{4, 5}.
Contract works The larger contract asks for property damage insurance on the work, for the full cost of reinstating it plus at least 10%, with the owner’s interest noted on the policy⁴. The smaller contract asks for the full reinstatement cost⁵.
Proof Under the larger contract, before work starts and whenever the owner asks, the builder provides certificates of currency. If they don’t, the owner may arrange the insurance and deduct the cost⁴.
Not the law Building Commission NSW says the extra insurances in its contracts are recommended to protect the consumer, and aren’t legally required under the Home Building Act²⁰.

Workers’ compensation in NSW.

Compulsory for most employers. Our guide to who needs workers’ compensation covers the other states.

Who needs a policy Every employer, unless they pay $7,500 or less in wages a year, have no apprentice or trainee, and aren’t part of a group of businesses³.
Subcontractors An ABN doesn’t settle it²¹. A contractor who doesn’t sublet the work, employs no one, and isn’t doing work that’s part of a trade or business they regularly run in their own name or under a business name, is taken to be your worker²².
A subbie’s unpaid premiums A principal contractor is liable for a subcontractor’s unpaid premiums for the work, unless it holds the subcontractor’s written statement with a certificate of currency. It can withhold payment until it gets one, and must keep it for 7 years^{23, 24}.
Sole traders Sole traders and partners can’t cover themselves with workers’ compensation, and need no policy if they have no employees³.
What it costs icare’s 2026–27 industry rate for house construction is 4.840% of wages, and for carpentry services 9.690%, before the dust diseases levy²⁵. icare’s rates are frozen for 2026–27 and 2027–28, though an employer’s own premium can still change²⁶.
If you’re not insured A penalty notice of $5,500, or $11,000 for a large employer. In court, up to $55,000 and 6 months’ imprisonment. Plus up to double the premium avoided^{26, 27}.

Licence and registration.

A contractor licence is needed for residential building work worth more than $5,000 in labour and materials, including GST²⁸.

Insurance for a licence The NSW Government’s licence page tells licensed builders and tradespeople they must get HBCF cover for each home building project over $20,000²⁹. A licence can be suspended if the holder is asked to show it has complied with the insurance rules and doesn’t¹.
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 licence³⁰.
From 1 July 2027 Registered building practitioners must be adequately insured, under a professional indemnity policy or otherwise. No amount is set: the practitioner must judge what’s adequate. The exemption runs until 30 June 2027^{6, 7}.
Changing The Building (Approvals and Practitioners) Act 2026 passed in August 2026 and takes effect once its regulations are developed. No start date is set³¹. It will replace the Design and Building Practitioners Act, including the insurance rule above³⁵.

How long NSW builders are liable.

Separate from the HBCF’s own time limits. Building interstate? See builders insurance in Victoria and Queensland.

Statutory warranties Implied in every contract for residential building work, including a builder’s contract with a subcontractor, and a contract can’t take them away. An owner has 6 years to start proceedings over a major defect and 2 years over anything else, counted from completion¹.
Major defects A defect in a major element, such as the load-bearing structure, a fire safety system or waterproofing, that makes, or is likely to make, the building or part of it unusable, or threatens to destroy it or make it collapse¹.
The 10-year limit No civil action for loss or damage from defective building work can be brought more than 10 years after completion, generally the date of the occupation certificate³².
Duty of care Anyone who carries out construction work owes the owner, and every later owner, a duty to take reasonable care to avoid economic loss from defects. A contract can’t remove it³³.

FAQ

Common questions.

Is builders insurance compulsory in NSW?

Two kinds are today. Builders must hold home building compensation (HBCF) cover on residential work worth more than $20,000, and most employers must hold workers’ compensation. Contract works and public liability aren’t required by the Home Building Act, but Building Commission NSW’s standard contracts ask for both.

How much is home warranty insurance in NSW?

icare’s base rate for a new home in Sydney, Newcastle or the Central Coast is 1.158% of the contract price, including GST and stamp duty, from 1 November 2025. That is about $5,790 on a $500,000 contract, before the builder’s own loading or discount of up to 30%.

What is the threshold for home warranty insurance in NSW?

A contract price of more than $20,000 including GST. Contracts between the same parties for the same job are added together.

Who pays for HBCF insurance?

The builder pays icare when applying for the certificate of insurance for each job. The building contract must state the cost of the cover.

Do subcontractors need HBCF insurance?

No. Only the principal contractor insures the work, whatever a subcontract is worth. A contractor hired directly by an owner-builder is the principal contractor for that work, so insures it if it’s over $20,000.

What happens if a builder doesn’t have HBCF cover?

The penalty is up to $110,000 for a company and $22,000 otherwise. The builder also can’t enforce the contract or make a security of payment claim for that work.

Do NSW builders need public liability insurance?

Not under the Home Building Act. Building Commission NSW’s standard home building contracts ask for public liability of at least $5 million.

Do I need a broker to get HBCF insurance?

No. icare says builders can manage HBCF cover themselves in its portal, and that using a service provider such as a broker is optional.

Can I get a builders insurance quote through COVRA?

Yes, from the broker, for covers such as contract works and public liability. COVRA passes your enquiry to one licensed or authorised broker, who can get quotes from insurers for you. COVRA doesn’t quote or sell insurance itself. HBCF cover is different: icare is the only insurer.

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Who commonly considers it.

Residential builders An HBCF certificate for each job over $20,000, and the covers the contract asks for
Renovation builders Extensions, alterations and repairs to homes
Trade contractors Working directly for a homeowner on jobs over $20,000
Builders who employ Workers’ compensation, and subcontractor’s statements from subbies

Covers builders look at.

Our guides to the covers builders most often ask about.

Public Liability Insurance Business Vehicle Insurance Professional Indemnity Insurance

Sources.

Home Building Act 1989 (NSW), NSW legislation, 10 June 2026
Home Building Regulation 2014 (NSW), NSW legislation, 16 May 2025
Do I need Workers Compensation Insurance?, icare, 2026
Home building contract for work over $20,000, Building Commission NSW, July 2025
Home building contract for work over $5,000 and up to $20,000, Building Commission NSW, July 2025
Design and Building Practitioners Regulation 2021 (NSW), NSW legislation, 30 June 2026
Update on amendments to building regulations, Building Commission NSW, 26 June 2026
Insurance obligations for residential building works, SIRA (NSW), 9 July 2026
For builders and tradies, SIRA (NSW), 14 April 2026
Do I need HBCF?, icare, 2026
New eligibility review: eligibility fact sheet, icare, February 2026
How do I manage HBCF cover?, icare, 27 February 2026
Exemptions from the Home Building Compensation Scheme, SIRA (NSW), 26 March 2026
What does HBCF cover?, icare, 27 February 2026
SIRA annual report 2024–25, SIRA (NSW), 27 November 2025
SIRA commences review of the Home Building Compensation Fund, SIRA (NSW), 14 August 2024
HBCF premium guidelines, icare, 1 November 2025
What risk factors impact on your HBCF premiums?, icare, 2026
Find out how much HBCF cover costs, icare, 27 February 2026
Building Commission NSW home building contracts to download, Building Commission NSW, 2026
Classifying workers or contractors for Workers Compensation purposes, icare, 2026
Workplace Injury Management and Workers Compensation Act 1998 (NSW), schedule 1, NSW legislation, 1 October 2026
Workers Compensation Act 1987 (NSW), section 175B, NSW legislation, 1 October 2026
Subcontractor’s statement (OPT011), Revenue NSW, June 2026
Workers compensation premium rates 2026–2027, icare, 19 May 2026
Key changes for employers: workers compensation legislative reform 2026, SIRA (NSW), 28 July 2026
Key employer obligations and penalties, SIRA (NSW), 29 July 2026
General building work, NSW Government, 3 September 2026
Insurance cover for building work, NSW Government, 6 July 2026
Building practitioner obligations when working on regulated buildings, Building Commission NSW, 8 September 2026
Building productivity reforms, Building Commission NSW, 19 August 2026
Environmental Planning and Assessment Act 1979 (NSW), section 6.20, NSW legislation, 1 September 2026
Design and Building Practitioners Act 2020 (NSW), part 4, NSW legislation, 10 June 2026
HBCF premium calculator, icare, 1 October 2026
Building (Approvals and Practitioners) Act 2026 (NSW), NSW legislation, 14 August 2026

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