What Is Included In A Builders Warranty?

Are you confused regarding what a Builders Warranty is and what’s included in it? Then go through our comprehensive writeup on the topic and clear your doubts.

Building a home is one of the most critical life decisions and investments.

Only some builders are created equal, and the home you get as the end product might need to be better. Structural defects, inferior building materials and slipshod workmanship can contribute to a lengthy default list.

It’s not the end of the world; you have options and are protected by Fair Trading Australia. As long as you’re using a licensed builder within the state of construction, you will be covered by some warranty. To ensure that homeowners are provided with the necessary protection for getting their homes built, all Australian states and territories have a Builders Warranty.

However, homeowners are often confused regarding what’s included under warranty and what isn’t. We will give you the complete lowdown on how a builder’s Warranty works to ensure you don’t have issues.

It would be best to ask your builder the right questions before constructing your home.

Builders Warranty Basics

What Builders Warranty Means

Builders Warranty is a form of home warranty insurance that protects the homeowner against faulty, incomplete, or sub-par residential building work. According to the laws governing homeowner rights in Australia, a house must be suitable for inhabitation at the end of the building project.

However, that’s not the only criteria that need to be fulfilled. At the same time, every facet of the construction must be precisely according to the homeowner’s specifications outlined in the building contracts. Otherwise, the builder can repair and make the changes at no cost to the homeowner under the statutory warranty.

When it’s not viable or possible for the builder to bear this cost, the home building compensation fund or Builders’ Warranty insurance kicks in. It’s essentially a form of insurance that helps cover expenses on behalf of the homeowner if the builder cannot bear them due to situations like bankruptcy, death, or natural disasters.

Insurance generally covers costs associated with repairing structural defects in the building work. The maximum amount covered depends on the insurer and contract price. The warranty for structural defects extends six years after the building is completed. If the defects found are non-structural, the cover extends for up to two years.

Understanding their rights and obligations under construction law is crucial for owner-builders undertaking residential construction projects to avoid potential building disputes. Appliance warranties, such as a 10-year warranty on certain appliances, could extend past the statutory period.

What Builders Warranty Covers

While the exact details of the cover will vary from state to state, in general, a Builders Warranty can take several reimbursement forms for a home building project. These range from any extra expense required for non-structural defects to reimbursement of deposits made if construction fails to start.

Again, there may be situations where the builder needs help to complete the project and leaves it halfway or partially complete. In such situations (for example, the sudden death or disappearance of the licensed builder), the homeowner is provided with the funds needed to complete construction, acting as a safety net.

Homeowners and builders often need clarification regarding whether Builders Warranty insurance is compulsory. The short answer is yes, it is mandatory across Australia, but the specifics vary from region to region.

For example, any contract of 12,000AUD and above in the Northern Territories requires a certificate of insurance for a builder’s warranty. In New South Wales, the amount changes to 20,000AUD, while Tasmania doesn’t have a Builders Warranty scheme required by law.

In NSW, homeowners can approach NSW Fair Trading or the NSW Civil and Administrative Tribunal to assist with building disputes and ensure builders comply with warranty requirements.

How To Get Builders Warranty Insurance


It is not the homeowner’s responsibility to take out the builder’s insurance; the builder is responsible for doing so.

In fact, with the builder’s Warranty insurance, the construction work itself can commence. This is because proof of insurance must be submitted to the local council for project approval.

That’s why, before signing the contract for the project, the homeowner must get a copy of the builder’s Warranty certificate with details of the project contract. This certificate is vital in case a claim needs to be made.

The Process Of Making A Claim

We’ve already mentioned the instances when you’ll be required to claim the builder’s Warranty insurance. To make a claim, you must collect all the required documentation regarding your building project.

This includes the building contract, proof that you’ve made all payments to the builder, and the insurance certificate the builder provided. The construction plans and other structural details of the project are also necessary.

Once these have been collected, you must complete a form, the formal declaration that you’re making a claim. This form, the documents mentioned above, and details about the builder must be sent to the policy provider.

If you sell your home within the coverage period, the existing insurance should be passed on to the new owner.

Final Words

Builders’ Warranty insurance safeguards against unforeseen situations during and after the building process. It provides a shield that ensures the homeowner is not left in the lurch.

We hope the above has given you a clearer idea about what insurance covers, how it works, and what benefits you can get from it. However, the specifics will change depending on your project and the construction region.

Here are some tips on finding the right builder for you; it covers everything mentioned above and everything you need to know.

Check the builder’s tradesperson license before commencing construction. Buildrite Sydney handles everything for you, from providing our license forms and insurance certificates to ensuring the quality of our constructions.

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