Owner Builder Warranty in NSW

Owner Builder Warranty NSW

NSW Home Warranty

On 19 October 2011 the NSW Parliament passed a package of reforms to the Home Building Act 1989 which will impact on Owner Builders and includes changes to:

These reforms apply to all residential building work covered by home warranty insurance, including work completed by Owner Builders, but do not apply to claims that have already been made (whether finalised or not) or to legal proceedings underway or finalised.

The changes will commence in two stages, the first took effect on 25 October 2011 while a second began on 01 February 2012.

Requirement to notify home warranty insurers in writing

Home Warranty insurance issued after 30 June 2002 protects subsequent purchasers of owner built property from defective or incomplete work where the Owner Builder becomes insolvent, dies, disappears or fails to comply with a money order of a Court or the Consumer, Trader and Tenancy Tribunal.

In general subsequent purchasers must lodge a claim for defective or incomplete building work within the insured period. If the work is defective, the purchaser must lodge the claim within 6 months of becoming aware of the problem.

If the subsequent purchaser becomes aware of a loss within the final 6 months of the insurance period, they can take an additional 6 months after the end of the insured period to lodge a claim with the insurer.

In cases where a claim cannot be made within the above time frames because an insured event has not occurred (i.e. the owner builder has not disappeared, died, become insolvent or failed to comply with a money order of a Court or the Consumer, Trader and Tenancy Tribunal) subsequent purchasers may be able to make a claim after the period of insurance through a delayed claim.

In order to make a delayed claim the subsequent purchaser must:

1.       Notify the home warranty insurer in writing of defective or incomplete building work within the insured period.

2.       Diligently pursue the Owner Builder to fix the defective or incomplete work after the loss becomes apparent.

If the certificate of home warranty is dated after 30 June 2002 and you have ever verbally notified your insurer about making a claim, the law now requires that you make this notification in writing. You have 6 months from 25 October 2011 to put into writing any previously given verbal notification.

Note: The above timeframes only relate to notifying the insurer of a loss. A formal claim may be lodged at a later date.

Time limits on home warranty insurance claims

If the certificate of home warranty insurance is dated before 30 June 2002, the changes require the subsequent purchaser to make a claim within the insurance period. However, if the work is defective and the loss becomes apparent in the last 6 months of the insured period, you have a further 6 months after the end of the period to make your notification. This is known as an extended claim period.

If the subsequent purchaser has already properly notified the insurer in writing of the defective or incomplete work but has not yet made a claim, they have until 25 April 2012 to make a claim in order to comply with the new requirements.

Claiming outside the home warranty insurance period

For any new claims against home warranty insurance policies issued after 30 June 2002, the subsequent purchaser of the owner built home may be able to make a claim – a delayed claim – outside the insurance period provided they:

1.       Can demonstrate the owner builder was diligently pursued to rectify the problem and

2.       have properly notified the insurer in writing during the insurance period.

A notification of a loss includes a ‘related’ loss

It is assumed that the purchaser has notified the insurer of every loss caused by the defect when making a notification about faulty work. This change applies regardless of what is in a purchaser’s policy.

Ten year limit

For home warranty insurance policies issued before 1 July 2010, all claims (including related claims) must be lodged within 10 years of the work being completed.

Definition of completed

The term ‘completed’ has a significant role in legislation because it marks the beginning of the time period for home warranty insurance. For Owner Builders the work is regarded as ‘complete’ when it can be used for its intended purpose and is free of major defects. The following events can determine when this occurs:

1.       The date of issue of an occupation certificate or,

2.       18 months after the Owner Builder permit was issued.

Proportionate liability

Under the new laws when a purchaser takes action against the Owner Builder of their home for defective or incomplete work the owner builder will not be able to limit their responsibility to the part of the work for which they were directly responsible, regardless of the provisions contained in the Civil Liability Act 2002.

This does not mean that the Owner Builder cannot use the provisions contained in the Civil Liability Act in separate legal proceedings.

February 2012 changes

The reforms outlined below will apply to the following from 01 February 2012:

Ø  New residential building work

Ø  New home warranty insurance policies

Ø  New residential building contracts

Statutory warranty periods

Owner Builders must warrant that, amongst other things, their work has been performed in a proper and workmanlike manner. Commencing 01 February 2012, the warranty period will be 6 years for structural defects and 2 years for non structural defects. These periods will be extended by 6 months if the subsequent purchaser becomes aware of a defect in the last 6 months of this time period.

Threshold for mandatory home warranty insurance

Commencing 01 February 2012 all residential building work completed by an Owner Builder and worth more than $20,000 must be covered by mandatory home warranty insurance. The previous threshold was $12,000.

Additional home warranty insurance benefits for subsequent purchasers.

Under the existing law, if a subsequent purchaser makes a home warranty insurance claim, they must pay the first $500 of that claim. After 01 February 2012 purchasers will only be required to pay the first $250 of any claim.

In addition, all home warranty insurance policies issued after 01 February 2012 will receive a minimum cover of $340,000 regardless of the value of the work.

Background Information

NSW Owner Builder Home Warranty  insurance scheme is an integral element of the NSW government consumer protection strategy. Owner Builder Warranty is designed to provide a safety net to the purchaser of an owner built home or residential construction. Home Warranty is designed to protect the purchaser (not the Owner Builder) where an Owner Builder is unable, unwilling to fulfil their legal obligations to the purchaser or fails  to repair defective work because of death, disappearance or insolvency.

The objectives of the NSW Home Warranty Scheme are:

To provide a safety net for purchaser (buyer) of an owner built home where the Owner Builder (the vendor) is unable or unwilling to return and repair defective work.

Minimize un necessary disruption to the Owner builder residential construction segment and ensure a consistent approach to protecting consumers

To contribute to the improvements in standards of Owner Builder works

AOBIS is Australia’s largest Owner Builder underwriting agency and is the NSW Owner Builder Home Warranty Authorized Binding Intermediary. Insurance is issued by Calliden Insurance Ltd, as agent for NSW Self Insurance Corporation (SICorp)

More details www. homewarranty.nsw.gov.au

Need a quote?

AOBIS is NSW Home Warranty centre. Our size is a reflection of our skill and expertise in this ‘specialist’ area of insurance.  Brokers and AR’s in particular are prioritized, and follow a simple and straightforward process so Owner Builders don’t need to tear up forests of paper work to meet statutory requirements.

3 REASONS WHY OWNER BUILDERS PREFER AOBIS:  

1. Super fast turnaround of quotes and policy schedules. Within minutes (subject to Application process)
2. Exclusively Owner Building – we know this business in detail and therefore our customers benefit through our experience, knowledge and resources
3. Seamless inhouse systems delivering cost effective and accurate Home Warranty Insurance solutions

From 1^st October 2011 new pricing structures apply – and whilst the NSW government is seeking greater transparency, it remains a process that requires solid understanding and experience. AOBIS is unique; simply because it’s all we do and our performances are our livelihood. Moreover, Owner Builders are not generally experienced Home Warranty Insurance skilled. That’s why an experienced Owner Builder Insurance underwriter is important

Contact 1300 850 131 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Need an application form click here

Want more background information? Then contact the underwriter click here

Home Building Warranty scheme is set for major transformation as the NSW Home Warranty Insurance Fund assumes responsibility for the Domestic Home Warranty Insurance Scheme:

Owner Builder Warranty Insurance only covers defects, which are not identified in the Inspection Report.

More than ever before Broker and AR customer responsiveness and service quality are at the forefront of securing business. Increasingly Owner Builder specific skills, knowledge and value adding service levels will drive customer satisfaction, security and comfort.

AOBIS is Australia’s exclusive Owner Builder underwriting agency – we know, live and protect Owner Builders across the nation. We don’t compete with our valued intermediaries. We don’t tie our customers up in paper work. We speak in plain English. Our job is to service you, the broker or AR, and allow you to serve your customer with professional ease, swiftly, with detail and confidence.

Need a Home Warranty quote? We require:

1. Cost of residential Owner Builder works
2. Date of final inspections or occupancy certificate date
3. Postcode

Complete and ensure Owner Builder signs an Owner Builder Warranty Application form

Email documents to

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Our response time to generate your Warranty Certificate is normally within 120 minutes and of course subject to quality and detail of the application.

AOBIS is dedicated to Brokers and Authorized Representatives through quality of service, knowledge, price and intermediary profit.

Click here to download Owner Builder Warranty Proposal NSW Application Form

Click here to download Owner Builder Warranty NSW Product Disclosure Statement

Or refer to the NSW Government website