The Queensland Building and Construction Commission regulates everything – yes everything – to do with building and construction projects in Queensland. As part of their responsibility, they oversee a program under state law that is called the Queensland Home Warranty Scheme. When people mention ‘QBCC insurance’, it’s really referring to this scheme. The purpose of the Queensland Home Warranty Scheme is to protect Queenslanders if something doesn’t quite go to plan when they’re renovating a home or building one from scratch. Residential building work valued at more than $3300 (including labour cost, building materials and GST) must be insured under the Queensland Home Warranty Scheme.
Who pays for the insurance?
The homeowner pays the principal contractor, who then pays the QBCC. The Queensland Home Warranty Scheme is funded by premium payments that are made by contractors on behalf of the homeowner to the QBCC to insure residential properties undergoing construction or renovation works worth more than $3300 against damage. The $3300 threshold is inclusive of GST, the cost of the labour and additionally also includes the amount paid for building materials, even if the contractor is not providing the materials. If a subcontractor is hired to assist the principal contractor with a build, they won’t need to pay the premium. The principal contractor’s payment to the QBCC will cover all work under the contract between them and the homeowner.
When does the premium need to be paid?
The premium must be paid before construction or building work begins or within 10 days of the contract being signed. This ensures that insurance coverage through the Queensland Home Warranty Scheme starts as soon as the premium is paid, the contract is signed or the work has started – whichever happens soonest. Typically, the cost of the insurance premium will be included in the deposit payable by the homeowner to the builder. The insurance lasts for a total of six months and six days from either the date the premium is paid, the date that the contract is agreed or the date that works start – whichever happens soonest.
How much is QBCC insurance?
Insurance taken out under the Queensland Home Warranty Scheme is calculated based on the insurable value of the work, including any associated works such as landscaping, fences, air conditioning and more. In relation to evaluating the insurable value, the QBCC states the following:
Calculate the insurable value by adding together the value of:
- materials (even if they are being supplied by others)
- labour (which includes the cost of the QLeave levy for projects valued at more than $150,000 (excluding GST)
- GST.
By way of example, the QBCC’s premium table shows that if the insurable value of work done on a new home build is $700,000, the premium payable for QBCC insurance will be $8182.25. Premiums differ slightly for alteration works. If $700,000 in alteration or extensions are being undertaken, the premium is $7069.95. If smaller alterations to a value of, for example, $10,000 are to be undertaken, the insurance premium is $257.70. Both tables can be viewed below:
As with anything related to building legislation, this is a complex area of construction law and legal advice is always recommended before signing any contracts.
What does the insurance cover?
Insurance taken out under the Queensland Home Warranty Scheme covers the homeowner for losses if something goes wrong during construction on their property. This can include a contractor not completing the work that they were contracted to complete or not fixing defective work or the building suffering from subsidence (sinking). Home warranty insurance can pay up to a maximum of $200,000 on certain claims. Strict time limits apply for making a claim. These time limits differ depending on circumstances, so it’s best to consult us to find out more information.
Do all works require insurance?
Basically, yes. The QBCC is very clear that insurance is required for any residential building with a roof, including new homes, garages and carports, manufactured homes (like a kit home or moveable dwelling), houses in over-50s villages (excluding registered retirement villages), townhouses, duplexes, units or apartments up to three storeys above a car park. Home warranty insurance must also be taken out for the installation of residential swimming pools. Regardless of the type of work being conducted, contractors must be insured with the QBCC if the works cost more than $3300. This includes building, extensions, additions, alterations, renovations and repairs to the residential dwelling.
How can Victor Legal help?
If you’re considering building a house or you’re finally looking into renovating that kitchen, it is imperative that you’re aware of your rights and obligations surrounding QBCC insurance. If you’re a contractor who has been approached by a client looking to update a bathroom or install a carport, you’ll need to know who, when and what to charge when drawing up a contract. If you’re in the unfortunate position of needing to make a home warranty insurance claim, it’s understandable that you might be feeling overwhelmed by the stress involved.
In all instances, our building and construction lawyers in Brisbane have the requisite skill and expertise to ensure the right insurances are in place, and when they’re not, we’ll fight to make things right and keep you up to speed while we do it. We’re trusted by building and construction experts across Brisbane to keep projects on track, both in terms of deadlines and finances. Contact us today.
^All information provided in this article is current as at 25/01/2023
