Yes. Under State Insurance Regulatory Authority (SIRA) guidance dated 9 July 2026, the values of multiple contracts forming a residential building project are added together when applying the $20,000 including GST threshold under NSW’s home building compensation (HBC) scheme. Under that same guidance, a principal contractor must take out insurance when the price is unknown or the work is not under contract if the reasonable market cost of labour and materials will exceed $20,000 including GST (figures checked 1 October 2026).
How is the project amount calculated?
For a principal contractor, SIRA’s rules are:
| Work arrangement | Amount used | Insurance requirement |
|---|---|---|
| Work under a contract | The price for the work | The price is over $20,000 including GST |
| A project under more than one contract | The total of all contracts | The total is over $20,000 including GST |
| Price not known or work not under contract | The reasonable market cost of the labour and materials involved | That cost will exceed $20,000 including GST |
For a multi-contract project, the contracts are not assessed as separate thresholds. If their combined value is over $20,000 including GST, the principal contractor must take out insurance even if each individual contract is below the threshold.
SIRA’s wording is “over $20,000 including GST”; the guidance does not describe exactly $20,000 including GST as included in the trigger. This calculation rule determines the project amount, while the person’s role determines who must carry the insurance.
Does a project total over $20,000 always require HBC insurance?
No. Certain project types are automatically exempt, including the construction of some multi-storey buildings. The project’s type should be checked against SIRA’s current guidance before relying on the threshold calculation alone.
Who must take out the insurance?
Only a principal contractor can satisfy insurance obligations under the Home Building Act 1989. A person is generally a principal contractor if they are:
- contracting with a homeowner;
- contracting with a developer;
- contracting with an owner-builder permit holder for residential building work covered by the permit; or
- a licensed contractor doing residential building work on land they own, other than under an owner-builder permit.
Homeowners, developers and owner-builders do not need to take out insurance under the HBC scheme themselves. Employees and subcontractors working for a licensed contractor also generally do not need to take out their own insurance for that work.
However, a principal contractor cannot satisfy its obligation by asking employees, subcontractors or other people performing the work to take out insurance. Insurance held by an employee or subcontractor does not cover the principal contractor.
When must the principal contractor take out insurance?
The principal contractor must:
- take out the insurance in the same name used to contract the work;
- use the corporation’s name if the work was contracted in that corporation’s name;
- take out insurance before requesting or accepting any money, including a deposit; and
- take out insurance before doing any residential building work under the contract.
Insurance may be bought from insurers or providers licensed by the State Insurance Regulatory Authority.
What can happen if the principal contractor fails to insure?
SIRA states the following maximum penalties:
| Situation | Maximum stated by SIRA |
|---|---|
| Failure to insure by a corporation | $110,000 |
| Failure to insure in any other case | $22,000 |
| Conviction for a second or subsequent offence | $55,000, imprisonment for a term not exceeding 12 months, or both |
These are maximums rather than automatic penalties in every case. Failure to insure may also affect contract enforcement, recovery of money from the customer, some planning-law requirements, and the commencement or certification of the project.
How can a homeowner or purchaser check the insurance?
SIRA provides a public register for checking whether a principal contractor has taken out insurance. A homeowner or purchaser of a new or renovated home should check whether the work was insured because uninsured work may make them unable to claim under the scheme.
Before acting, check SIRA’s current regulator page for the project scope, exemptions and contracting role, and read the policy’s Product Disclosure Statement. This is general information, not financial or legal advice.
Sources
FAQ
Do multiple contracts count separately for the $20,000 HBC threshold?
No. If a residential building project is carried out under more than one contract, SIRA says the amount is the total of all contracts. A principal contractor needs insurance when that total is over $20,000 including GST.
What if the contract price is unknown or there is no contract?
The fallback amount is the reasonable market cost of the labour and materials involved. Insurance is required when that amount will exceed $20,000 including GST.
Can a subcontractor’s insurance satisfy the principal contractor’s obligation?
No. Only the principal contractor can satisfy the obligation. Insurance taken out by an employee or subcontractor does not cover the principal contractor.
Does every project over $20,000 need HBC insurance?
No. Certain project types are automatically exempt, including construction of some multi-storey buildings. Check the current SIRA guidance for the particular project.