Home Insurance During Construction: What Sydney Builders & Owners Must Know (2026)

Why Construction Insurance Matters

Building a home is one of the largest financial investments most Australians make, and the construction phase is when your investment is most vulnerable. Between site accidents, storm damage, theft, fire, vandalism, and defective work, the risks during construction are substantial — and without proper insurance, you could face losses of tens or hundreds of thousands of dollars with no recourse.

In NSW, certain insurance requirements are mandatory by law, while others are strongly recommended. Understanding the difference — and knowing what your builder should carry — protects you from catastrophic financial exposure during the most critical phase of your project.

This guide covers every type of insurance relevant to residential construction in Sydney, who is responsible for each, what it costs, and how to verify your builder's coverage before signing a contract.

Home Building Compensation Fund (HBCF)

The Home Building Compensation Fund (formerly Home Warranty Insurance) is mandatory in NSW for all residential building work valued over $20,000. Your licensed builder must take out HBCF insurance before starting work, and provide you with a certificate of insurance.

HBCF covers you if your builder: • Dies or disappears during or after construction • Becomes insolvent (company liquidation or bankruptcy) • Has their licence suspended or cancelled

The coverage period is: • **6 years** for structural defects (foundations, load-bearing walls, roof structure) • **2 years** for non-structural defects (paint, tiles, joinery, waterproofing)

Maximum cover: $340,000 per dwelling (indexed annually).

**Cost:** HBCF premiums are paid by the builder and typically range from $4,000–$12,000 depending on the contract value. Most builders include this in their quoted price.

**Critical check:** Before signing any building contract, request a copy of the HBCF certificate. Verify it lists your correct address, the contract value, and your builder's licence number. A builder who cannot provide HBCF insurance either has a poor claims history or their insurer has assessed them as high-risk — both are major red flags.

Owner-builders must also obtain HBCF insurance if they intend to sell the property within six years of completion — but many owner-builders discover too late that insurers are reluctant to provide cover, and the premiums are significantly higher than for licensed builders.

Contract Works Insurance (Builders Risk)

Contract works insurance — also called builders risk insurance or construction all-risk — covers physical damage to the building under construction. This includes:

• Storm, hail, and wind damage to partially completed structures • Fire (including bushfire in BAL-rated areas) • Theft of materials stored on site • Vandalism • Water damage (burst temporary plumbing, flooding) • Accidental damage during construction

**Who carries it?** Under most HIA and MBA building contracts, the builder is required to maintain contract works insurance for the full contract value for the duration of construction. Clause 20 of the HIA Lump Sum Building Contract specifically requires the builder to insure the works.

**Cost:** Typically $1,500–$4,500 for a standard residential build, depending on contract value and risk factors.

**What it doesn't cover:** Defective workmanship itself (but covers consequent damage), existing structures on the site, landscaping, and items not permanently fixed to the building.

**Your responsibility:** Even though your builder carries contract works insurance, check that the sum insured matches the full replacement cost. If your contract is $850,000 but the builder has only insured for $600,000, you're underinsured. Also verify whether the policy covers materials stored off-site (e.g., kitchen cabinetry being fabricated in a workshop).

Public Liability Insurance

Public liability insurance covers claims for injury to third parties or damage to third-party property arising from the building work. Examples include:

• A delivery driver trips over materials on the footpath and breaks their leg • Construction vibration cracks your neighbour's retaining wall • Debris from your demolition damages a parked car • A visitor to the site is injured by falling materials

**Minimum requirement:** Most councils and certifiers require $20 million public liability insurance as a condition of development consent. Buildana maintains $20 million public liability cover.

**Cost:** $2,000–$6,000 annually for a licensed builder, typically included in their overheads.

**Subcontractor cover:** Each subcontractor should carry their own public liability insurance. As the homeowner, you should ask your builder to confirm that all subcontractors on your site are insured. Reputable builders like Buildana verify subcontractor insurance as part of our onboarding process.

**Important note for demolition:** Demolition work requires specific public liability cover with demolition endorsement. If your project involves a knockdown rebuild, ensure the demolition contractor carries appropriate cover — standard construction policies often exclude demolition-specific risks.

Insurance Checklist Before Signing Your Building Contract

Before signing a building contract with any Sydney builder, request and verify the following:

**From your builder:** ✅ HBCF certificate — correct address, contract value, licence number ✅ Contract works insurance — sum insured matches contract value ✅ Public liability insurance — minimum $20 million, current certificate of currency ✅ Workers compensation insurance — current policy covering all employees ✅ Professional indemnity insurance (if providing design services)

**Your own insurance:** ✅ Existing home insurance — notify your insurer of construction work (particularly for renovations and extensions on occupied homes) ✅ Contents insurance — if storing belongings on site during construction ✅ Landlord insurance — if the property is tenanted during part of the build period

**Red flags to watch for:** 🚩 Builder claims HBCF is 'not required' for your job 🚩 Builder cannot produce a current certificate of currency for any policy 🚩 Builder asks you to take out contract works insurance (this is almost always their responsibility) 🚩 Builder's company name on insurance doesn't match the contracting entity

Buildana provides all insurance documentation with every contract package. We maintain HBCF, contract works, public liability ($20M), and workers compensation insurance as standard — and make every certificate available to our clients before construction begins. Call 0476 300 300 for a transparent, fully-insured building experience.

Buildana builds across Sydney. Visit /construction/structural-lockup to learn more or /construction/completion-handover to discuss your project.