According to the Queensland Building and Construction Commission (QBCC) guidance dated 11 May 2025, home warranty insurance is compulsory for residential construction work valued at more than $3,300, including materials, labour and GST, and it pays up to a maximum of $200,000 on claims. Under that guidance, fixed-price residential contracts can be covered for non-completion and defective-work claims, while cost-plus contracts are covered only for defective-work claims because their uncertain final price leaves the scheme unable to quantify a non-completion loss. The QBCC's homeowner guide dated 24 January 2025 strongly recommends avoiding cost-plus contracts, and its scheme guidance says to use only fixed-price residential contracts; figures checked 1 October 2026.
Why does a cost-plus contract lose non-completion protection?
A non-completion claim concerns work the contractor does not, or cannot, finish. The QBCC says a homeowner can make this claim under the Queensland Home Warranty Scheme only where the residential building contract is fixed-price and the contractor is licensed.
| Contract type | Non-completion claim | Defective-work claim |
|---|---|---|
| Fixed-price residential contract with a licensed contractor | Can be covered | Can be covered |
| Cost-plus residential contract | Not covered | Covered |
The difference comes from how a non-completion loss is assessed. To settle that claim, the scheme needs to know the amount agreed under the contract to finish the work. A cost-plus contract has no certain final price, so the QBCC says it cannot determine whether the homeowner has suffered a quantifiable loss.
Defective-work claims do not depend on that missing agreed completion amount. A claim may be made where the contractor does not fix defects, including under a cost-plus contract.
Is home warranty insurance still compulsory for cost-plus work?
Yes. The contract type changes the scope of protection, not the need to arrange home warranty insurance for insurable residential work.
| Feature | QBCC requirement |
|---|---|
| Who pays the scheme | The contractor pays the premium |
| How the homeowner pays | The contractor collects the premium from the homeowner |
| Contract treatment | The premium is included in the contract |
| Timing | It is paid before work begins |
| Contract types covered by the premium requirement | Fixed-price and cost-plus residential contracts |
For a project above the compulsory threshold, the QBCC says each quote should include the home warranty insurance premium so the quotes can be compared accurately. Contractors must take out the insurance or risk significant penalties.
What can a home warranty claim cover?
The QBCC identifies several claim situations, but each claim remains subject to the scheme’s rules, limitations and exclusions.
| Situation | Claim type or treatment |
|---|---|
| The contractor does not, or cannot, finish the contracted work | Non-completion claim, available through a fixed-price residential contract with a licensed contractor |
| The contractor does not fix defects | Defective-work claim |
| The building suffers subsidence or settlement | A claim may be made |
| An accepted non-completion project is damaged by fire, storm, vandalism or theft | The cited guidance identifies these perils in connection with the accepted claim |
After paying a claim, the scheme tries to recover from the contractor the amount it paid to finish or fix the work.
Is every type of building work covered?
No. The QBCC’s 11 May 2025 guidance limits the scheme to residential construction work and identifies several exclusions.
- Home warranty insurance does not cover commercial building projects.
- It is not a substitute for home and contents insurance.
- Work in or for a multiple dwelling of more than three storeys is not considered residential construction work or insurable under the scheme. A storey that is mainly a carpark is not counted.
The classification of the building and work should therefore be checked before relying on the scheme.
How long does home warranty cover last?
The QBCC’s 11 May 2025 guidance sets cover at 6 years and 6 months from the earliest of:
- entry into the contract;
- payment of the premium; or
- commencement of the work.
If the residential construction work took more than six months to complete, cover can be extended by 6 months from the cover commencement day.
Claim timeframes depend on the type of claim, and the cited guidance does not state the same deadline for every claim. Cover cannot be renewed after it expires. Paying the contractor more than allowed by law or under the contract can also affect the insurance.
Does cover stay with the property if the home is sold?
Yes. The insurance covers the property, so it remains in place if the home is sold during the cover period. It cannot be transferred between contractors.
A home buyer or the buyer’s legal agent can search for any home warranty insurance attached to the property.
What should you check before signing the contract?
- Contract type: Check whether the document is fixed-price or cost-plus. The QBCC says to use only fixed-price residential contracts.
- Contractor status: If non-completion protection is important, verify that the contractor is licensed.
- Quote comparison: Ask for the home warranty insurance premium to be included in each quote.
- Completion obligations: Read the scope, price and contractor responsibilities carefully, especially where the final price is uncertain.
- Claim conditions: Check exclusions, claim timeframes and whether extra payments are permitted.
- Current documents: Review the current QBCC regulator page and the policy’s PDS before signing or making a claim.
This is general information, not financial or legal advice. Contract terms and current scheme requirements should be checked before you rely on the cover.
Sources
- What is home warranty insurance | Queensland Building and Construction Commission
- Home warranty insurance: A guide for homeowners | Queensland Building and Construction Commission
FAQ
Does a cost-plus contract have any Home Warranty Scheme protection?
Yes. Cost-plus residential contracts are covered for defective-work claims, but not for non-completion claims.
Why does an uncertain final price prevent non-completion cover?
The scheme needs an agreed amount under the contract to finish the work before it can quantify a non-completion loss. A cost-plus contract has no certain final price on which to base that assessment.
Who pays the home warranty insurance premium?
The contractor collects the premium from the homeowner and pays it to the scheme. It is included in the contract and paid before work begins.
Does selling the house cancel home warranty insurance?
No. The insurance remains attached to the property during the cover period, although it cannot be transferred between contractors.