In NSW, a principal contractor generally needs Home Building Compensation (HBC) cover for qualifying residential building work priced over $20,000 including GST, according to SIRA’s Insurance obligations for residential building works, dated 9 July 2026. They must hold cover of at least $340,000 before requesting or accepting money, including a deposit, or starting work, according to Service NSW’s HBC cover guidance, dated 9 September 2024.
Figures checked 1 October 2026.
Who must take out HBC cover?
Only the principal contractor can satisfy insurance obligations under the Home Building Act 1989. SIRA says a person is generally the principal contractor if they:
- contract with a homeowner;
- contract with a developer;
- contract with an owner-builder permit holder for work covered by that permit; or
- carry out residential building work on land they own as a licensed contractor, other than under an owner-builder permit.
A homeowner, developer or owner-builder does not take out insurance under the HBC scheme in that role. Where the value and project tests are met, responsibility rests with the principal contractor carrying out the work.
Employees and subcontractors cannot satisfy the principal contractor’s obligation by taking out their own insurance.
When does the $20,000 rule apply?
The official test combines the following requirements:
| Requirement | Current rule |
|---|---|
| Contractor | The obligation rests with the principal contractor. |
| Work | The work must be residential building work, including building, trade or specialist work involved in constructing, altering or renovating a dwelling. |
| Contract price | The price must be over $20,000 including GST. |
| Project status | The project must not be exempt from insurance. |
SIRA says certain project types are automatically exempt, including construction of some multi-storey buildings.
Service NSW lists projects that typically require HBC cover, including:
- alterations or renovations to residential buildings of any height;
- houses, duplexes and triplexes;
- low-rise residential multi-unit buildings up to 3 storeys; and
- structures associated with a home, such as backyard swimming pools, spas, garages and outbuildings.
These examples do not remove the need to check whether the specific project is exempt. The free HBC Assist tool can check whether a particular job needs HBC cover.
What if the job price is unknown?
If the price is not known, or the work is not being done under contract, insurance is required when the reasonable market cost of labour and materials will exceed $20,000 including GST. This can include residential building work carried out by a licensed contractor on land they own.
If one project is divided into more than one contract, SIRA says the amount is the total of all the contracts for that project.
When must the cover and certificate be in place?
For every job that meets the requirements:
- Take out HBC cover for that job.
- Hold cover of at least $340,000.
- Have the cover in place before requesting or accepting money, including a deposit, or doing residential building work under the contract.
- Take out the insurance in the same name used to enter into the contract. If a corporation contracted for the work, the insurance must also be in that corporation’s name.
- Provide the certificate of insurance to the homeowner before taking a deposit or starting work.
Service NSW states that failing to insure the job or provide the certificate as required is an offence under NSW law.
Do employees and subcontractors need their own cover?
Generally, no. An employee employed by a licensed contractor, or a subcontractor working for a licensed contractor, does not need to take out separate insurance under the HBC scheme. SIRA identifies these workers as exempt under section 98 of the Home Building Act 1989.
The principal contractor remains responsible. It cannot require an employee, subcontractor or other worker to take out insurance and then treat that as satisfying its own obligation. Where a licensed builder is the principal contractor and subcontracts building work, the builder is responsible for insuring the whole project.
Service NSW also notes that separate HBC cover is not needed where the work is subcontracted from another licensed contractor.
How can a homeowner verify cover with HBC Check?
For residential work above the relevant threshold, the NSW Government’s insurance guidance, dated 06 July 2026, says to check that the business has valid insurance before paying any money, including a deposit, or allowing work to start.
HBC Check is the free public register listing jobs that have HBC cover. Anyone can use it to confirm that a builder or tradesperson has valid cover for the residential work being carried out in NSW.
| Tool | What it checks |
|---|---|
| HBC Assist | Whether a particular job needs HBC cover. |
| HBC Check | Whether a job with HBC cover is listed on the public register. |
The principal contractor must also give the homeowner the certificate of insurance before taking a deposit or starting work. A current or future homeowner should check the property’s cover because uninsured work may leave them unable to claim under the scheme.
How do tradies apply through icare HBCF?
SIRA regulates the HBC scheme, while Service NSW identifies icare HBCF as the only insurance provider offering HBC cover. Service NSW’s HBCF directory, dated 27 February 2026, says icare manages the fund and assesses builders’ and tradespeople’s risk to determine their eligibility.
To be eligible, an applicant needs:
- a contractor licence for building, trade or specialist work;
- an ABN or ACN; and
- a certificate of eligibility.
The application path is:
- Find an insurance broker distributor through the list on the icare HBCF website.
- Get a Certificate of Eligibility from that broker distributor.
- Submit the HBC cover application through the broker distributor.
- Once eligible, apply for a Certificate of Insurance for each individual project contracted.
The Certificate of Eligibility sets out how much work the contractor can take on.
What does HBC cover protect against?
HBC cover, formerly called home warranty insurance, helps protect homeowners if their builder cannot complete building work or fix defects because of insolvency, licence suspension, death or disappearance, or cannot honour warranty obligations.
A claim may arise where the builder becomes insolvent, dies or disappears, or cannot complete the work or honour warranty obligations because their licence was suspended for failing to comply with a court or tribunal order to compensate the homeowner.
What happens if a principal contractor does not insure?
SIRA’s guidance states that a principal contractor may be liable to maximum penalties of:
- $110,000 for a corporation; and
- $22,000 in any other case.
A conviction for a second or subsequent offence may carry a penalty of up to $55,000, imprisonment for a term not exceeding 12 months, or both.
Failure to insure may also affect the contractor’s ability to enforce the contract or recover money from the customer. It may affect requirements under planning laws and the commencement or certification of the project.
Where should readers confirm the current requirements?
Check the current SIRA and Service NSW regulator pages for changes to thresholds, exemptions and application requirements. Also read the relevant policy’s Product Disclosure Statement before relying on its cover details.
This is general information, not financial or legal advice.
Sources
- SIRA — Insurance obligations for residential building works
- Service NSW — Apply for home building compensation cover
- NSW Government — Insurance cover for building work
- Service NSW — Home Building Compensation Fund
- icare — Home Building Compensation Fund
FAQ
Is the NSW HBC threshold $20,000 or more?
The cited SIRA test is over $20,000 including GST, rather than $20,000 or more. A principal contractor needs cover when that threshold is met and the project is not exempt. Use HBC Assist if the project’s status is unclear.
What if the final job price is unknown?
Cover is required when the reasonable market cost of labour and materials will exceed $20,000 including GST. For a project divided into more than one contract, SIRA says to use the total of all the contracts.
Does a subcontractor need separate HBC cover?
Generally, an employee or subcontractor working for a licensed contractor does not need separate HBC cover. The principal contractor must hold the cover, and insurance held by the worker cannot satisfy the principal contractor’s obligation.
When must I provide the certificate of insurance?
The principal contractor must provide it to the homeowner before taking a deposit or starting work. HBC cover must already be in place before requesting or accepting money, including a deposit, or doing work under the contract.
How can an owner confirm that a job is insured?
Use the free HBC Check public register and confirm that the builder or tradesperson has valid cover for the residential work in NSW. The homeowner should also receive the certificate of insurance before paying a deposit or work starting.
Partner links. Using them costs you nothing extra and may earn us a commission.