The builder is responsible for taking out the insurance and for the payment of the associated premium. This cost is usually passed on to the homeowner under the building contract, often as part of preliminary project costs. BII premiums can be charged in addition to the deposit under a contract.
No. The builder is required to take out the insurance on your behalf. As a homeowner you should check that this is in place before work begins by requesting a copy of the certificate and confirming with the insurer that your certificate is valid. See Homeowners page for more information.
You should contact CBS for advice promptly if your builder starts construction work without taking out BII. Without BII, you do not have protection in the event that the builder is not able to complete your project. It is an offence for a builder to commence work without BII.
The beneficiary of the insurance is always the homeowner. If the property is sold during the defect period, the new owner becomes the beneficiary of the insurance should a claim need to be made.
Deposits are covered by your BII policy once the insurance has been taken out by the builder. Until then, deposits are at the owners' risk.
Apart from a deposit of up to 5% and some initial third-party costs, builders cannot seek payment for work before it is completed. Your contract will set out the work stages and percentages payable. You should not pay a builder in advance of practical completion of these work stages. If you do so, you may not be able to recover these payments if the builder becomes insolvent. Please contact CBS if a builder asks for progress payments in advance, as this may be an offence and may indicate that the builder is in financial difficulties.
Building Indemnity Insurance is linked to the property. If your house is sold within 5 years of project completion, the insurance for defects will cover any future owners until the 5-year term has elapsed.
The insurance protects you from some of the losses you may suffer if your building work contractor becomes insolvent, disappears or dies. It usually costs more for a new builder to complete a part-finished project, and the policy contributes towards these costs up to the policy limit. It will also cover the cost of fixing any defects for up to 5 years from the date of completion of your project. The policy limit is the total limit of compensation available for all claims, non-completion and defects, for your project. Non-habitable structures are included if they require council approval and meet the other criteria of the insurance.
Policy limit - Your policy limit will depend on your insurer and the issue date of your policy. The current policy limit in the Building Work Contractors Regulations is $250,000 for new policies taken out on or after 10 November 2025. Some insurers began offering the increased policy limit earlier. See the About BII page for information on historical limits.
Secure your property - Costs incurred from reasonably securing your property are covered by your BII policy. This includes security fencing, doors, locksmith costs and many other security measures. Contact your insurer to confirm what is covered.
The following things are not covered by the policy:
- Building report fees
- Legal fees
- Losses related to rent
- Interest on loan payments
- An excess of up to $400
Lack of communication is not a trigger for an insurance claim, unless the builder is considered to have “disappeared”. If work has stalled and a builder is not responding to communication, please contact CBS.
Under BII policies, a building company is considered to be insolvent if an administrator or liquidator has been appointed to the company. An individual builder is considered to be insolvent when they become bankrupt. BII claims can be made at that time.
As well as making a claim as soon as possible, you may need to secure the property if it is not at lock-up stage and take any other action needed to minimise the risk of damage or degradation of the property. Your insurer will normally cover these costs, and you should discuss these with your claims officer.
If you believe you have grounds for a BII claim, please contact the relevant insurer via the details below:
QBE: 1300 790 723 or builderswarrantyclaims@qbe.com
Assetinsure: (02) 9251 8055 or claims@assetinsure.com.au
AB Phillips: 1300 242 136 or insurance@abphillips.com.au
This will depend on the nature of the claim and whether it is related to non-completion or defects, however parts of the process that remain the same are the need to obtain quotes for the required work, supplying the insurer with documentation relating to the original project and the payment of an excess, which is often deducted from any claim distributions. For more information on making a claim, please contact the insurer that issued your certificate.
QBE: 1300 790 723 or builderswarrantyclaims@qbe.com
Assetinsure: (02) 9251 8055 or claims@assetinsure.com.au
AB Phillips: 1300 242 136 or insurance@abphillips.com.au
