Home Warranty Insurance

When cover is needed

It is a requirement under the Building Act 2004 (ACT) that a licensed builder must obtain complying residential building work insurance (also referred to as home warranty insurance) or a Fidelity Fund certificate on behalf of the lessee from an approved Fidelity Fund scheme or insurer before commencing any building work over $12,000. There are some exemptions provided and if you're not sure, have a chat with your builder.

Fidelity Fund certificates or Home Warranty policies are required for construction of a class 1 building or class 2 building (town house, units, apartments) up to 3 storeys in height, and certain alterations or additions to existing residence where the work is valued at $12,000 and is structural in nature.

Fidelity Fund certificates or Home Warranty policies are not required for class 10 structures such as swimming pools, fences, landscaping, mail boxes or garages (unless structurally adjunct to the class 1 structure). The appointed Building Certifier may assist if you are unsure about these requirements. Certificates are also not required for Federal or Government projects or Owner Builder projects.

When can a claim be made?

A claim may be made for incomplete building work due to the builder's insolvency, disappearance or death, during the contract period. A claim may also be made for defects that come to light after completion of the project in the Statutory Warranty period if the builder is deceased, has disappeared or has suffered an insolvency event.

The legislation provides that a Fidelity Fund certificate or Home Warranty Insurance policy provides maximum coverage of $85,000. A Fidelity Fund certificate requires a claim to be made within 90 days of you becoming aware of the defect.

The Master Builders Association offers Fidelity Fund certificates through the MBA Fidelity Fund. Information about obtaining a certificate can be found at www.mba.org.au/consumer-advice/home-warranty-insurance/