Builders Warranty Insurance Summary

All builders are required by law to purchase Builders Warranty Insurance in ACT. This can be a very complex process; we want to simplify it so you can be successful every time and avoid the common traps.

Builders Warranty Insurance (also called Homeowners Warranty) is a form of insurance that applies to home building work that requires building approval and costs $12,000 or more1 in the ACT. It helps protect the homeowner (and any subsequent owner) against financial loss in the event that contracted building work isn’t completed or is considered defective and the builder has died, disappeared or become insolvent.

Builders must take out Builders Warranty Insurance before commencing work on a project or requesting a deposit or any other payment. It’s the responsibility of the builder to obtain the insurance and the builder must also provide the homeowner with evidence of the insurance.

What is the process to apply for HBCF in NSW?

We will work with you to obtain all the relevant documentation for the review. This timeframe is reliant upon you, the builder.

We suggest you call 1800 762 878 or click here to discuss your application as soon as you can.

To support your application being successful, discuss with your broker your business objectives. We will work with you to build a plan and create a tailored submission for the insurer.

To support your application being successful, in our experience the following are critical.

• Prompt engagement with insurer where there are requests for additional information
• Experience (time working and types of projects) in the industry
• Good financial performance
• An accountant that understands the unique requirements of financial reporting for the building industry
• Applicant’s understanding and acceptance of a steady growth (working with the insurer to achieve growth in a sustainable timeframe).

Once we have completed the discussion and plans, HIA Insurance Services will review your documentation and discuss any final questions. Your application will be submitted to the insurer for review.

The application will be reviewed by the insurer and if the application is successful terms will be provided.

Terms are agreed to, and you can purchase Home Indemnity Insurance for your project to commence.

Why can my submission be rejected and what are common traps?

From our experience we see hundreds of applications and have identified some common reasons why submissions are rejected and the potential reasons why a submission is denied. A broker can support you through this process to help you get the right information the first time.

Why do applications get denied or are unsuccessful?

Generally, this can be because the businesses have adverse history of directors or key personnel. For example, prior bankruptcy, or involvement with an entity that has become insolvent. No experience and an unsatisfactory financial position can contribute to rejection of limits.

What are some of the common traps for unsuccessful applications?

Significant growth in a short period of time
When an entity has only a few years trading history, and a significant jump in limit is requested (I.e $2m to $6m) this presents concerns to the insurer for how the business can manage the increase and sustain profitability during growth phase.

Poorly presented financials
Have an accountant that understands the construction industry, who you can work closely with to ensure your financial statements are presented accurately.

Choosing your building supervisor
Where the one supervisor is responsible for supervising multiple entities, the insurer places additional scrutiny as there are questions around how they can manage multiple sites across multiple entities. Making sure you choose a supervisor who can be dedicated to your business, will be ideal.

To help ensure the success of your future applications, we suggest engaging a broker such as HIA Insurance Services as soon as you can. We are residential construction insurance specialists and have the expertise and experience to be able to guide you through the process. To learn more about Builders Warranty Insurance click here or call us on 1800 762 878 or request more information.