Stay Fully Covered: How HBCF Works and What Homeowners Must Do to Comply

Building defects law

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The Home Building Compensation Fund (HBCF) protects NSW homeowners if their builder cannot finish the work or fix defects because they have become insolvent, died, disappeared, or had their licence suspended for failing to comply with a Tribunal or Court money order. When one of these events occurs (called a trigger event), you may be able to claim under the HBCF policy issued for your project.

Any residential building work over $20,000 must be covered by HBCF insurance before the builder starts work or takes any payment, including a deposit. After the builder is assessed, they receive a Certificate of Eligibility and then a Certificate of Insurance must be issued specifically for your property.

As a homeowner, you must receive this Certificate of Insurance before work starts. It must show your name, the builder’s exact legal name, your site address, the contract price, and a description of the work. You can check the certificate and the builder’s licence online. HBCF applies to most homes, including strata buildings up to three storeys.

If a trigger event occurs, HBCF may help with losses such as:

  • Failure to start the work (loss of deposit)
  • Failure to finish the work (up to 20% of the contract price)
  • Major defects (covered for six years from completion)
  • Non-major defects (covered for two years from completion)

If defects are discovered in the last six months of these periods, you have an extra six months to make your claim. The maximum cover is $340,000 for most current policies, and the protection also benefits future owners of your home unless a previous claim has used up the cover.

To comply with the policy and protect your right to claim, you must notify icare HBCF as soon as you become aware of any defect, loss, or problem—usually by lodging a Loss Notification Form. This must be done within the required timeframes, generally within six months of becoming aware of the issue. Even after notifying HBCF, you must still take reasonable steps to pursue the builder until a trigger event occurs.

By making sure your builder provides the correct insurance, keeping copies of your documents, notifying HBCF promptly, and continuing to follow the required process, you can ensure you remain protected under the HBCF scheme.

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