The Queensland Home Warranty Scheme (QHWS) is a statutory insurance scheme administered by the Queensland Building and Construction Commission (QBCC).
It is a not-for-profit scheme funded through insurance premiums paid for by contractors to protect homeowners against financial loss when something goes wrong during a building or renovation project (Home Warranty Insurance). However, not everyone is eligible and, as with any other insurance policy, there are exclusions and limitations.
Relevantly, Home Warranty Insurance provides cover only for residential construction work exceeding $3,300 in value. Work for buildings exceeding three storeys[1] is not insurable under the QHWS as it is not considered residential construction work.[2] This means that if the building in your scheme is a high rise, then it will not be covered under the QHWS (even if the high -rise is purely residential).
Home Warranty Insurance covers work in relation to buildings of up to three storeys, including multiple unit dwellings (e.g. townhouses, duplexes, villas). Assistance is available to subsequent purchasers of these properties, including bodies corporate, if the statutory requirements (including timeframes) are met.
What does Home Warranty Insurance cover?
Home Warranty Insurance provides cover where:
- the contractor does not complete the work you contracted them to do, or they can not complete the work (for example, if they become insolvent) (non-completion claim);
- the QBCC has accepted your non-completion claim and the building work is damaged by fire, theft, vandalism, or theft;
- a contractor fails to rectify defects (defective work claim); and
- if the building suffers from subsidence or settlement.
Home Warranty Insurance does not cover all types of building work even if it is considered residential construction work.
Generally, and in the context of community titles schemes, it covers:
- original construction of the building or related roofed building (e.g. private garage, shed or carport);
- renovations to the building;
- anything attached to the building that requires building or plumbing approval;
- anything attached to the building that is not supported by anything else (e.g. awning or handrails);
- anything attached to building that is used for water supply, sewerage, drainage or stormwater; and
- a verandah or deck attached to the building.
Home Warranty Insurance does not cover certain defects including:
- driveways, paths, fences and landscaping;
- fire alarm systems, scaffolding, curtains, blinds, internal shutters, carpets, floating floors, vinyl, earthmoving and excavating, laying asphalt or bitumen, insulation, insect screens;
- construction of a slab that does not include construction of a building on top of it;
- hot water systems; and
- security doors and grills.
However, these items are covered for a non-completion claim. For non-completion claims, the QHWS provides cover only for fixed price residential contracts.
Who is responsible for taking out Home Warranty Insurance?
The obligation is on the contractor to pay the premium for Home Warranty Insurance to the QBCC.[3] The premium is collected from the consumer by its inclusion in the contract price.
We recommend that you verify whether the premium has been paid to the QBCC, as soon as you have entered into the contract with the contractor and the deposit for the work has been paid.
Why? Because cover under the QHWS commences irrespective of whether the premium has been paid. If the contractor does not pay the premium and cover has commenced, the QBCC is entitled to require you (as the consumer) to pay the premium before a claim is paid out.[4] This is particularly relevant to a non-completion claim, for example, where a deposit has been paid, but no work has commenced.[5] If the contractor has not paid the premium, the QBCC would be entitled to offset the amount of the premium from the refund of the insurable deposit.
It is also important that you do not pay a deposit that is greater than the maximum deposit allowed under the legislation, or for work in advance ahead of schedule under your contract, as this may reduce your entitlement under a claim.
Maximum claim amount
Generally, the maximum claim amount for standard cover is limited to $200,000 per claim (i.e. per unit).
For defects in common property, the maximum entitlement is $200,000 x the number of units affected, capped at a total value of $1million.
Optional additional cover
Provided the contractor has paid the standard premium for the work, you may take up additional cover by paying an additional premium within 30 days after entering into the contract or prior to the work starting (which ever is earlier).
Optional additional cover generally increases the maximum claim amount to $300,000 per unit.
For defects in common property, the maximum entitlement for optional additional cover is $300,000 x the number of units affected, capped at a total value of $1.3million.
Timeframes
The following timeframes apply to claims under the QHWS:
| Defects | Non-completion | ||
|---|---|---|---|
| Structural | Non-structural | Work started | Work not started |
| Covered for 6 years and 6 months from when cover commences | Covered for 6 months from when the work is substantially complete | Contract must end within 2 years of the commencement date | Contract must end within 2 years of the date the contract is entered into. |
| Must lodge a claim within 3 months of noticing the defect. | Must lodge a claim within 7 months of when the work is substantially complete. |
The contract with the licensed contractor must be either terminated due to the contractor’s default (unless the contractor has died, the company is deregistered, or the licensed contractor is both insolvent and their licence has been cancelled). Claim must be lodged within 3 months after the date the contract ends. |
|
These timeframes must be strictly complied with.
Defective building work
The QBCC In addition to administering the QHWS, the QBCC also serves a dispute resolution function and has the power to direct a contractor to rectify building work that is defective or incomplete.[6]
The QBCC requires that a consumer complete the dispute resolution process before it will consider their eligibility for assistance under the QHWS. The process includes notifying the builder of the defects and providing them with an opportunity to rectify the defect before lodging a complaint for to the QBCC.
The following timeframes apply to complaints for defective building work:
| Structural | Non-structural | Direction to rectify |
|---|---|---|
| Must lodge a claim within 12 months of noticing the defect | Must lodge a claim within 12 months from completion of work | Can only issue within 6 years and 6 months from when the building work was completed. |
Note that the timeframes to qualify for a claim under Home Warranty Insurance is less than what is required for dispute resolution.
It is essential that you notify the builder of the defects and lodge a complaint to the QBCC as soon as possible.
Contact us if your scheme has defects or you have problems with a renovation project. We would be happy to advise you on your options.
[1] For a multi-unit dwelling, the number of storeys is calculated by excluding one storey if more than 50% of the floor area of a storey is designed to accommodate motor vehicles: see s 67WE(4), Queensland Building and Construction Commission Act 1991 (QBCC Act) and s 29, Queensland Building and Construction Commission Regulation 2018 (Regulation).
[2] See s 67WC, QBCC Act, meaning of primary insurable work and residential construction work.
[3] See ss 68A and 68B, QBCC Act.
[4] See ss 68H(4)(a) and 68B(2), QBCC Act.
[5] See the unfortunate circumstances in Zhivkov v Queensland Building and Construction Commission [2025] QCAT 387, at [28]-[31].
[6] Section 72, QBCC Act.
© Bugden Allen Group Legal Pty Ltd. This is general information only and not legal advice. You should not rely on this information without seeking legal advice tailored to your specific circumstances.
David Bugden
Bugden Allen
E: david@bagl.com.au
This post appears in Strata News #798.
This article has been republished with permission from the author and first appeared on the Bugden Allen website.
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