As a builder, one of your core responsibilities is obtaining Home Building Compensation Fund (HBCF) insurance before starting any residential building work which is valued at $20,000 or more and is for dwellings up to three storeys high. Without this insurance in place, you are not entitled to receive any payment.
For homeowners, this insurance offers critical protection. If the builder dies, disappears, becomes insolvent, or fails to comply with a court order relating to building defects, the homeowner may still be able to claim under the HBCF policy.
Most builders are well aware of this obligation. However, in my experience, one important detail often slips under the radar: homeowners (including strata lot owners) must notify the insurer within six months of becoming aware of any defect to preserve their rights under the policy.
Let’s break that down a bit.
While securing HBCF cover is the builder’s responsibility, the reality is that construction projects involve a broad range of professionals—architects, engineers, plumbers, electricians, bricklayers, and more. Each of these trades has their own role and area of responsibility. And as we all know, it only takes one oversight or mistake for a defect to arise.
When defects do occur, it is often the builder or developer who ends up shouldering the legal responsibility under the Home Building Act 1989 NSW (HBA), regardless of who was at fault.
Builders routinely trust qualified professionals to handle specialist work, and developers invest in projects in good faith, with the intention of delivering a compliant, high-quality product that reflects well on their reputation.
But unfortunately, smooth, trouble-free completions have become less common. This decline in confidence has triggered multiple waves of government reform, designed to increase consumer protection and boost accountability across the sector.
Reforms such as the Design and Building Practitioners Act 2020 NSW (DBPA) were introduced following high-profile building failures that shook public trust. These changes aim to protect homeowners and ensure professionals across the supply chain are held accountable for their work.
While the intention behind these reforms is sound, their impact on the ground has been significant. Increasing bureaucracy, stricter compliance obligations, and heightened personal liability have left many builders and stakeholders discouraged, even as the housing crisis grows more urgent.
There is a shared hope across the industry for reforms that strike a more practical balance, where consumer protection and industry sustainability can truly coexist.
Understandably, some builders feel uneasy when a homeowner lodges a loss notification with the insurer. But it is important to see this for what it is: a procedural safeguard, not an accusation.
Submitting a loss notification to the insurer within six months of identifying a defect or even commencing NCAT or court proceedings just before the statutory warranty period expires, are necessary actions to preserve the homeowner’s legal rights. It does not reflect on the builder’s intent or effort. In fact, it is well understood that almost no build is entirely defect-free. The industry relies on the professionalism of builders, many of whom are genuinely committed to addressing issues and maintaining their hard-earned reputations.
At the same time, homeowners are doing what is required of them under the policy. Both parties are following the system as it was designed to function.
To help projects run smoothly, and to protect both yourself and your clients, it is vital to stay across your key obligations under the HBCF scheme. These include:
Obtaining HBCF insurance before starting any residential project over $20,000.00 and providing the certificate of insurance to the homeowner and, if applicable, the developer.
Complying with all statutory warranties and contractual obligations, ensuring that the project meets required standards.
Fixing any defects within the warranty period to prevent disputes and maintain good relationships.
Understanding the risks of non-compliance, which can include fines, licence suspension, legal proceedings, and personal financial liability.
By staying compliant and proactive, builders can avoid unnecessary issues and contribute to a more trustworthy and resilient building industry. Itis about more than just ticking boxes it is about maintaining a reputation for professionalism, protecting your business, and building the kind of trust that lasts well beyond project handover.
excellence@kreisson.com.au
02 8239 6500
