The NSW Government is making significant changes to the Home Building Compensation (HBC), formerly known as home warranty scheme, in NSW.
These changes will provide better protection for homeowners building and renovating, and give builders better access to cover.
What are the key changes?
The first key change is that HBC products can be provided by private companies. Since 2010 HBC has been underwritten and provided by the NSW Government via a statutory authority called iCare.
The second major change is that HBC products can be provided by non-insurance companies. These providers are called ‘Alternate Indemnity Providers’ and will provide cover via a fidelity fund or other approved methods.
SecureBuild is an Alternate Indemnity Provider.
A third notable change is the splitting of HBC policies into two separate policies:
- a ‘construction period’ policy, and
- a ‘warranty period’ policy.
Both policies provide protection of up to $340,000.
Learn more about HBC policies .
If a builder is entering into a contract with a homeowner that exceeds $20,000, the builder will be required to take out the two policies on behalf of their homeowner client.
The changes allow a builder to obtain each policy from different providers.
For example, the builder could purchase the construction period policy from provider A and the warranty period policy from provider B.
The Government has established a new Authority, the State Insurance Regulatory Authority (SIRA), who is responsible for ensuring all providers have the financial capacity, skills, experience and integrity to provide HBC product.
SIRA will issue licenses to new providers and monitor the conduct and performance of all providers.
Learn more about SIRA and its regulatory role.