19 Jul

Staying compliant in 2015 with new builders insurance laws

Latham Australia


Earlier this year, major changes were made to the Home Building Act which have significant impacts on the way small businesses and contractors operating in the building and construction industry will handle licensing, contracting and builders insurance. These changes have been designed to reduce unnecessary burden and encourage builders to devote more resources into business investment and job creation — which is great news to those working in the field. However, it will also mean small businesses and contractors will need to make some adjustments to the way they work.

Failing to comply with the changes carries a harsh penalty; if your business is caught out more than once, you could face 12 months in prison. So to ensure your business remains compliant under the new builders insurance laws and other regulatory amendments, here’s a rundown of the changes and how they might impact you.


Changes to The Home Warranty Insurance Scheme

At Lathams we’re aware that some of our clients have felt confused about the most recent changes to the NSW Home Warranty Insurance Scheme, and how it may affect their small business or contractor obligations. As of 15 January 2015, this scheme was renamed the Home Building Compensation Fund (HBCF). The function of the HBCF will largely remain the same; protecting consumers from financial loss in the instance where a builder is unable to honour their contractual commitments due to insolvency, death or disappearance.

As the statutory body responsible for administering the HBCF, NSW Self Insurance Corporation (SICorp) will no longer be handling owner-builder insurance (where a builder is also the owner of the residential construction).

Under the regulatory requirements of the HCBF, any contracted work with a value of more than $20,000 (including the costs of materials and labour) will require coverage by the HMCF.


How to stay compliant

As a small business-owner or independent contractor in the building and construction industry, it’s essential for you to have a thorough understanding of the regulatory requirements of your business in order to avoid legal penalties — which can be harsh. Any contractor who does not comply with this insurance (and who has already received a warning) may be punished with a 12 month jail term.

The new laws have also introduced a public online register, which has made it far easier for builders to be caught out for non-compliance.

While the impact of insurance laws will differ depending on your individual business, the two key factors you need to aware of to ensure your business stays compliant are:

  • that you must not take money from a homeowner under a residential building contract before work has commenced;

  • that insurance is mandatory for construction work that exceeds $20,000 in value (if the total contract price is not known at the time of signing, a reasonable estimate of the cost of labour and building materials required should be used).


The new regulations pertaining to builders insurance law in NSW were made as part of broader legislative amendments this year ― so if the new insurance legislation applies to your business, be aware that you may also be affected by other changes to building law. If you’re still unsure of how these changes may impact you, contact NSW Fair Trading directly, or get in touch with one of the endorsed insurance agents listed on the HBCF website. These agents can provide specialist guidance in regards to the assessment of eligibility, issue of Certificates of Insurance and collection of premiums, as well as the management of claims.


As a third generation family owned and operated company specialising in manufacturing the highest quality architectural stair, floor and wall products right here in Australia, at Lathams we like to stay updated with the latest in building and construction industry news — and sharing it with our clients. This month, we’ve got a free ebook available which explores the recent legislative changes to building and construction laws and how they will affect small businesses and contractors in the leadup to tax time. You can download it here. Alternatively, if you’d like to know more about Latham and how our products can be incorporated into your construction project, contact us  today.



Latham Australia

Latham Australia is a 3rd generation family owned & operated company specialising in manufacturing the highest quality architectural stair, floor and wall products right here in Australia.

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