FAQ's
What is Home Warranty Insurance?
Home Warranty Insurance is designed to cover a homeowner against the death, disappearance insolvency of a contractor for building/renovation works carried out on their residential property.
If the contractor’s death, disappearance or insolvency happens before the works are completed, the insurance goes towards the extra cost of engaging another contractor to complete it. If there is a fault in the completed work that needs to be rectified during the warranty period, the insurance covers the cost of rectification by another contractor if the original contractor is no longer able.
Please note that this page seeks to provide only a very general explanation of Home Warranty Insurance. Home Warranty Insurance is governed by legislation and regulation and you should refer any specific questions to our office.
When do I need Home Warranty Insurance?
If you answer “Yes” to all three of the questions below, Home Warranty Insurance is necessary.
- Is the total contract value for your job over $12,000 (including PC’s)?
- Is the building used for residential purposes?
- Are you contracted directly to the property owner (this includes an owner-builder or a strata)?
How long does Home Warranty Insurance last?
The period of cover for loss arising from a structural defect is 6 years after the completion of the work, or, in the case of loss arising otherwise than from any such structural defect, 2 years from the completion of the work. Please refer to your job certificate or contact our office should you have any questions
How do I apply for Home Warranty Cover?
All applicants are required to undergo a once-a-year-only process to be granted eligibility for Home Warranty Insurance before applying for a job-specific Warranty Insurance policy. You will need to provide a current contractors licence number(s), a completed application form and some other supporting documentation in order to be granted eligibility.
MGA Insurance Brokers has made the eligibility process simple through our online application process. Additionally, there is NO need to provide Bank Guarantees.
Eligibility Requirements
- Registered Business Name
- ABN
- Contractors Licence issued by the Department of Fair Trading
- Copy of your Certificate of Registration for the Trading Name
- Past 2 years financial statements
**NOTE** In order to obtain eligibility, points 1,2 and 3 must be identical in name (ie. the name that you contract to your consumers in):
If you are set up as a Pty Ltd company, or a partnership, you will be required to submit evidence of TWO Contractors Licences; one for the company/partnership, and one for the primary supervisor.
Sole Traders are required to submit one Contractors Licence only.
If your business is part of a Trust, copies of the Trust Deeds will need to be presented prior to the eligibility being confirmed.
Plumbers are required to be members of the Master Plumbers Association in order to be considered for eligibility. This is part of the on-line application criteria and we will confirm this membership on your behalf.
Please complete this form and contact our office on 1300 654 642 for more information.
Once eligibility has been confirmed (this may take up to three working days), we will be able to issue individual, job-by-job insurance certificates for each contract requiring cover.
Is there an annual limit to how much warrantable work I do?
No, once you have obtained your letter of eligibility for the year from the insurer there is no limit to the number or value of contracts that you enter into requiring cover during that year.
Can I apply for retrospective Home Warranty Insurance?
The Home Building Act (1989) stipulates that a Home Warranty Insurance certificate must be put in place by the contractor BEFORE commencing any work, and before collecting any money on the contract.
If you are in a position where a job requiring Home Warranty Insurance has already been completed or partly completed please contact our office.
What happens if a contractor does not have proper Home Warranty Cover in place?
As Home Warranty Insurance is a legal requirement, if it is not in place the property owner can cancel the contract at any time. In such cases, the consumer is not obliged to pay anything for any works carried out.
Non-compliance with the provision of Home Warranty Insurance is a breach of the requirements of a contractor’s licence can result in heavy fines for the contractor.