Your Guide to Home Owners Warranty Insurance WHAT IT IS, WHAT IT COVERS AND WHO ARRANGES IT
Home Owners Warranty (HOW) Insurance, officially known as the Home Building Compensation Fund (HBCF), is a mandatory insurance policy required for all home building projects valued at $20,000 or more in NSW.
It protects homeowners from financial loss if their builder is unable to complete the work or fix defects due to unforeseen circumstances, such as business closure or financial difficulties.
What does it cover? If your builder is unable to complete the work or address defects, HOW insurance may cover: The cost to complete unfinished work Repairs for major defects, including structural issues Compensation for financial loss due to incomplete or defective work This insurance does not cover disputes with your builder or minor defects that can still be fixed by the builder.
Who arranges your HOW insurance? Once you sign your Building Contract, we will arrange your HOW insurance on your behalf. Here is how it works: → STEP 1. Apply for HOW Insurance - Our team will obtain your HOW insurance, which must be in place before you pay the balance of your 5% deposit. → STEP 2. Issue HOW Insurance - Once your HOW insurance certificate has been issued, your Pre-Construction Customer Service Consultant (CSC) will email you a copy and upload it to Home Hub, your customer portal, so you can access it anytime. → STEP 3. Pay Balance of 5% Deposit - After you receive your HOW insurance certificate, the balance of your 5% deposit is due. Please ensure payment is made as soon as possible to avoid delays in lodging your building application.
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COMMON QUESTIONS →
1. What is a premium? The premium is the amount we pay on your behalf for your HOW insurance. It is listed in your Building Contract (Schedule 6) and includes all applicable fees. The premium amount shown on your HOW insurance certificate will be lower because it does not include GST, stamp duty, or other charges.
2. Where is the premium amount listed and what costs are included?
On your HOW Insurance Certificate under ‘Premium Paid’
This amount is for the base insurance premium only, and excludes GST, stamp duty, application and servicing fees.
On your HOW Insurance Certificate under ‘Price’
This premium amount includes GST, stamp duty, and application fees but excludes servicing fees.
In your Building Contract (Schedule 6) under ‘Cost of Insurance’
This amount includes GST, stamp duty, application and servicing fees. This is the total amount we pay on your behalf.
3. Why is the contract amount on my HOW insurance certificate different to my Building Contract total? The contract amount on your HOW insurance certificate reflects the Building Contract total, minus the premium amount we paid on your behalf. 4. Am I only insured for the amount on my HOW insurance certificate? No, your HOW insurance covers your build as per the policy limits set by the NSW Government’s State Insurance Regulatory Authority (SIRA). The insurance provides up to $340,000 per home, with a maximum of 20% of your total build cost (including agreed variations) available for non-completion claims. These limits apply regardless of whether your final contract price is higher than the amount listed on your HOW insurance certificate.
Call 13 63 93 | Clarendon.com.au
Clarendon Homes (NSW) Pty Limited. (ABN 18 003 892 706) |
Ground Floor, 21 Solent Circuit, Norwest NSW 2153
|
Builder Licence 2298C
|
08/2025
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