Statutory warranties and home warranty insurance explained

What are statutory warranties in residential building work?

Statutory warranties (called implied warranties in Victoria) are minimum promises about the quality of residential building work. They apply whether or not they appear in the contract, and in NSW and Victoria, for example, the owner cannot contract out of them.

In general terms, the builder or tradesperson warrants that:

• the work will be done with due care and skill, in a proper and workmanlike manner
• the work will follow the plans and specifications in the contract
• materials will be good, suitable for their purpose and new unless the contract says otherwise
• the work will comply with the relevant building laws
• the work will be done with due diligence and finished by the contract date, or within a reasonable time
• a new home, or a renovation of a home, will be reasonably fit to live in.

The warranties usually also benefit later owners, so a builder can face a claim from someone who bought the home after it was finished.

What warranties apply in NSW and how long do they last?

In NSW, the Home Building Act 1989 implies statutory warranties into every contract for residential building work. NSW Government guidance lists them as: due care and skill; work in accordance with the plans and specifications; materials suitable for their purpose and new unless otherwise specified; compliance with the Act and other laws; due diligence and completion within the contract time or a reasonable time; a dwelling reasonably fit to live in where the work includes building, altering or renovating a dwelling; and work and materials reasonably fit for any specified purpose the owner relied on the contractor for.

The warranties last 6 years for major defects and 2 years for all other defects, from the date the work was completed. The Consumer Building Guide explains that there is another 6 months if a defect only becomes apparent in the last 6 months of either period.

A major defect is, in summary, a defect in a major element of the building (such as the structure, waterproofing or fire safety systems) caused by defective design, workmanship or materials, or a failure to meet the NCC’s structural performance requirements, that makes the building unusable, causes destruction, or threatens collapse. Serious water leaks are a common source of major defect claims; our guide to common waterproofing defects explains why.

What are the implied warranties in Victoria and what is the 10-year rule?

In Victoria, the Domestic Building Contracts Act 1995 implies warranties into every domestic building contract, regardless of its cost or whether it is in writing. Consumer Affairs Victoria summarises them as workmanlike work with reasonable care and skill, suitable materials, completion by the contract date, compliance with the law and, for homes, suitability for occupation.

The time limit comes from section 134 of the Building Act 1993. A building action generally cannot be brought more than 10 years after the date the occupancy permit was issued for the work, or, if no occupancy permit was issued, the date of the certificate of final inspection. A longer period applies to some cladding-related actions. The right passes to a new owner if the home is sold within that time.

How do warranties and home warranty cover work in Queensland?

Queensland’s statutory warranties sit in Schedule 1B of the Queensland Building and Construction Commission Act 1991 and are part of every regulated domestic building contract. QBCC contract templates describe a warranty period of 6 years for breaches resulting in structural defects and 1 year for all other breaches, measured from completion, termination or cessation of the work, with a further 6 months if the breach becomes apparent in the last 6 months.

Queensland’s insurance is different from most other states. The Queensland Home Warranty Scheme is a statutory scheme run by the QBCC and is required for most residential construction work valued over $3,300, including labour and materials. Unlike a pure last resort scheme, it can help when a contractor fails to rectify defective work or when a fixed price contract is validly ended because of the contractor’s default, as well as on death, disappearance, insolvency or licence suspension. Key time limits include:

• Structural defects: cover for 6 years and 6 months, and a claim within 3 months of first becoming aware of the defect.
• Non-structural defects: you must become aware within 6 months of substantial completion, and claim within 7 months of it.
• Non-completion: the contract must end within 2 years, and the claim must be made within 3 months after it ends.

The Queensland Government has flagged a review of the scheme’s insurance threshold, cover amount and timeframes as part of its Building Reg Reno program, so check the QBCC’s current settings before you quote.

What is home warranty insurance and when does it pay out?

Home warranty insurance protects the home owner, not the builder. The builder must take out the policy, or the certificate of cover, for the owner’s benefit, usually before taking a deposit or starting work.

In NSW, Western Australia, South Australia, the ACT and the NT, and in Victoria for contracts signed before 1 July 2026, it is essentially a last resort cover. icare, which runs the NSW Home Building Compensation Fund (HBCF), says it steps in only when the builder has become insolvent, died, disappeared, or had their licence suspended for not complying with a court or NCAT order to pay the owner money. If the builder is still trading, the owner must generally pursue the builder first, through dispute resolution, the tribunal or the courts.

When cover is triggered, it may pay for loss of the deposit, the cost to complete unfinished work and the cost to fix defects within the policy periods and limits. In NSW, cover for major defects runs for up to 6 years and for other defects up to 2 years from completion, and the claim limit is $340,000 for policies issued from 1 February 2012. It does not cover maintenance, wear and tear, changes of mind or everyday disputes with a builder who is still trading.

When is home warranty insurance required in each state and territory?

Each jurisdiction sets its own threshold and its own name for the cover:

• NSW: Home Building Compensation (HBC) cover through icare HBCF, for most residential building work over $20,000.
• Victoria: Home Warranty insurance from the Building and Plumbing Commission (BPC) for major domestic building contracts signed from 1 July 2026, where the work is worth more than $20,000 and the home is 3 storeys or less. Contracts signed earlier used domestic building insurance, required over $16,000.
• Queensland: the Queensland Home Warranty Scheme, for most residential work over $3,300.
• Western Australia: home indemnity insurance under the Home Building Contracts Act 1991, for work requiring a building permit and valued at more than $20,000.
• South Australia: building indemnity insurance. The threshold was $12,000 and has been reported by state agencies as rising to $20,000 for contracts signed from 10 November 2025; confirm the current figure with Consumer and Business Services.
• ACT: residential building insurance or a fidelity fund certificate. The warranty and insurance part of the Building Act 2004 does not apply to residential building work costing less than $12,000.
• NT: residential building cover through a fidelity fund certificate. From 30 March 2026, regulations raised the minimum value of work that requires cover from $12,000 to $25,000.
• Tasmania: compulsory home warranty insurance was removed in 2008. The Residential Building (Home Warranty Insurance Amendments) Act 2023 provides for a new scheme for contracts over $20,000, but it starts on a date to be proclaimed, so check CBOS for its current status.

Each scheme has exemptions, so check the rules before you quote, and never take a deposit before the cover is in place. A variation that changes the contract price can also require the cover to be amended; see our guide to building contract basics.

What changed in Victoria on 1 July 2026?

Victoria has moved from a last resort scheme to a first resort one. Consumer Affairs Victoria explains that, from 1 July 2026, the BPC covers domestic building work under a new scheme called Home Warranty insurance. It covers work that is incomplete, faulty or non-compliant, and a home owner may be able to claim if the builder cannot or will not complete or fix the work after being asked. It also responds if the builder does not follow a final VCAT or court order.

For builders, this means a claim can now arise while you are still trading. Expect a paid claim to be pursued against you; in Queensland, for example, the QBCC says it pursues the contractor to recover the claim amount. Treat defect notices from Victorian owners as urgent. Domestic building contract rules are also changing under the Domestic Building Contracts Amendment Act 2025, so keep an eye on its commencement.

Checklist: warranties and insurance on every home building job

• Know the warranty periods in your state and build your defect response process around them.
• Check the insurance threshold and scheme rules before quoting, including any exemptions.
• Arrange the cover before you take a deposit or start work, and give the owner the certificate.
• Amend the cover when the contract price changes through variations, where the scheme requires it.
• Keep records that prove compliance: inspections, test results, photos, product certificates and handover documents.
• Respond quickly to defect notices, especially in Victoria and Queensland where owners can claim while you are trading.
• Get paid properly too. Our guide to security of payment explains your payment rights in each state.
• Get legal advice if a warranty or insurance claim is made against you.

Frequently asked questions