These changes largely benefit consumers and will require some contractors to pay premiums for building works which they have never had to pay for before.

What are the changes to the Home Warranty Scheme?

The QBCC insurance scheme has been expanded to include coverage for the following work, provided it is valued at over $3,300:

1. The erection, construction or installation of a residential swimming pool (whether or not as part of a residential building contract).

2. In relation to a residence or related roofed building (e.g. shed):

  • All building work performed within the building envelope (internal or external parts of the building), for example, painting, tiling, plastering, roof restoration and repair work, rendering of walls, floor restoration and glazing work
  • Anything attached to the building if it requires building approval or plumbing approval
  • Any structure attached to the external part of the building where there is no other supporting structure (eg: awning or handrail); and
  • Stairs or an access ramp which are permanently attached to the building.

3. In relation to plumbing and drainage for a residence or related roofed building:

  • Building work for the primary water supply (eg: install water tank for primary water supply)
  • Building work for sewerage or drainage (eg: work on a sanitary drain connecting a residence to the sewerage main); and
  • Stormwater drainage (eg: repair of downpipe or gutter).

4. The installation of a manufactured /pre-fabricated home, whether or not the pre-fabricated home is supplied by the builder or the owner.

These changes apply to all contracts signed on or after 28 October 2016.

How are the premiums calculated?
There are also changes to the way in which premiums are calculated. The tables of applicable premiums are available on the QBCC website for contracts entered into before and after 28 October 2016.

Premiums are now based on the ‘insurable value’ of the works as opposed to the contract price or value of the work. The insurable value of the works is an amount which represents the reasonable cost of having the work carried out by a licensed contractor and includes the cost of all materials, whether or not the work is to be carried out on this basis.

The premiums must now be paid by the contractor within the earlier of 10 business days after the date the contract was entered into or before the works are started. Previously, the premium had to be paid as soon as practicable after the contract was signed. In addition to this, if a variation to the contract increases the contract price by $5,000.00 or more, the builder must now pay a ‘top up’ premium before commencing the variation works. This is unlikely to go down well with contractors by creating more paperwork and possibly resulting in delays in the progress of works.

The changes allow consumers to pay an optional premium to the QBCC to increase the maximum benefit payable under the scheme from $200,000.00 to $300,000.00. Optional coverage can also be obtained to increase the coverage for storage and accommodation costs from $5,000.00 to $10,000.00. The consumer must pay for this additional premium within 30 days of signing the contract or prior to work starting, whichever is the earlier.

Impacts on Contractors
These changes to the QBCC insurance scheme must not be ignored by contractors! The changes will result in additional premiums for some contractors for works that previously were not covered under the scheme. We recommend that contractors review the changes to the scheme to determine what additional works will require coverage and calculate any revised premiums payable so that these amounts can be accurately claimed from the consumer in the building contract.

For further information in relation to the changes to the Queensland Home Warranty Scheme, please contact us.