What HBCF Insurance Actually Covers (and what it doesn’t)
If you're building or renovating a home in NSW and your project value is over $20,000, your builder must provide you with Home Building Compensation Fund (HBCF) Insurance. It’s a legal requirement, it is also one of the most misunderstood parts of the building process.
Many homeowners assume HBCF will cover anything that goes wrong. In reality, the protection is much narrower — and only kicks in under certain circumstances.
Here’s what HBCF Insurance does and doesn’t cover, and why choosing a reputable, insured builder still matters more than the policy itself.
What Is HBCF Insurance?
The HBCF is a NSW government-backed insurance scheme that protects homeowners when:
The builder dies, disappears, becomes insolvent, or
The builder’s licence is suspended for non-compliance with a Tribunal or Court Order
In these situations, HBCF may cover:
Incomplete work
Defective work
Structural defects for up to 6 years
Non-structural defects for up to 2 years
It’s a last resort safety net — not an everyday warranty or maintenance policy.
What HBCF Covers
If your builder is no longer around or legally unable to complete the job, and you’ve suffered a loss, you may be eligible to claim under HBCF for:
What is Covered and why:
Incomplete work - E.g. Builder goes bankrupt during construction
Structural defects - E.g. Foundation failure, major water ingress
Non-Structural defects - E.g. Leaky taps, uneven flooring (2-year window)
Loss of deposit - E.g. Up to the insured limit, if builder disappears
Legal costs to rectify - E.g. In some cases, for claim-related action
Now, what is not covered with an example:
General wear and tear - It’s not a maintenance policy
Issues caused by owner builders - only licensed builder work is eligible
Changes of mind - you can't claim if you no longer like the design
Defects that arise outside of statutory time limits - must be within 2 or 6 years from completion
Disputes where the builder is still trading - in these instances you must go through Fair Trading/NCAT first
Any cost beyond the capped limit - Coverage is up to $340,000 per dwelling (as of 2024).
Key HBCF Facts You Should Know
Your builder must provide the certificate before starting work or taking a deposit.
It is project specific, you must receive a certificate for your individual project.
You can check your builder’s licence and HBCF status via the Service NSW portal.
Why You Should Still Vet Your Builder
HBCF protects you if your builder disappears. But it doesn’t help if they cut corners, disappear mid-project without insolvency, or leave you with endless delays while still technically “active”.
At LPC Projects:
We obide by BBCF requirements
We provide certificates as part of your contract pack
We stay across all updates to NSW Fair Trading legislation and Class 2 reforms
And most importantly, we’re here long after handover
Final Word: Ask to See the Certificate
Before any work begins, ask your builder:
“Can you please provide the HBCF certificate for my project?”
“Is your licence current and free of restrictions?” - Check online yourself - also.
“What’s your plan for rectifying minor defects post-handover?”
Insurance is important — but choosing a reputable, licensed, experienced builder is still your best protection.
