Building Indemnity Insurance in South Australia: When Residential Builders Must Hold Cover

What it is

South Australia does not have home warranty insurance. It has building indemnity insurance (BII), and the name is not a technicality. A builder who asks an SA broker for home warranty cover is using a term that does not exist in the governing Act.

BII is the last-resort consumer protection scheme for residential building work in South Australia. It sits under Division 3 of Part 5 of the Building Work Contractors Act 1995 (SA) and the Building Work Contractors Regulations 2011. Consumer and Business Services (CBS) is the regulator.

The policy is issued in the name of the homeowner. The builder arranges and pays for it, but the benefit runs to the owner and to every future owner within the cover period.

When cover is required

BII must be in place for domestic building work that meets both limbs of the test:

• the work is valued at $20,000 or more, and
• the work requires development approval under the Planning, Development and Infrastructure Act 2016

The threshold moved on 10 November 2025, rising from $12,000 to $20,000. A builder working from older guidance, or from a contract template drafted before that date, is carrying the wrong number.

The Regulations carve out three categories. Contracts solely for demolition, contracts for a multi-storey residential building, and contracts for the South Australian Housing Trust do not require BII.

Before any money and before any work

Section 34 of the Act is blunt. A building work contractor must not perform the work unless a complying policy is in force and the owner has been given a certificate evidencing that policy.

There is a second gate that catches builders out. The certificate must also be lodged with the relevant authority, meaning the council or private certifier, and work must not commence before that lodgement. The owner needs a copy, and so does the council.

Going without is a serious offence. The maximum penalty is $100,000 for a natural person and $500,000 for a body corporate, with a $20,000 expiation fee.

A contractor building on their own behalf can seek an exemption from CBS.

What the policy covers

BII is last resort. It responds only where the builder has died, disappeared or become insolvent.

That is the whole list. There is no trigger for a builder who is still trading and simply refusing to fix the work. A defect dispute with a live, solvent builder is a contract and tribunal problem, not an insurance claim.

Within those triggers the policy covers loss from non-completion and the inability to enforce a statutory warranty for defective work.

Claims for defective work can be made up to five years after the work has been finished. If the house is sold inside that window, the cover follows the property and protects the new owner for the balance of the term.

The limit for new policies is $250,000, prescribed in the Regulations from 10 November 2025 and applying regardless of which insurer wrote the policy.

Who writes it

Three insurers operate in South Australia. QBE writes BII underwritten by the South Australian Government Financing Authority (SAFA) through a reinsurance arrangement. Assetinsure writes a competing product. AB Phillips covers the pool, spa and landscaping sectors only.

Owner-builders

Owner-builders cannot take out BII. The cover can only be written for a licensed builder, and no insurance is required for work an owner-builder does themselves.

Where an owner-builder engages a licensed contractor for work of $20,000 or more forming part of a development approval, that contractor must take out BII and hand over the certificate before work starts.

The resale trap is the one to watch. A person who sells or rents two or more buildings within five years that they have built or improved is treated as a building work contractor unless they prove otherwise. That person needs a builder licence and must carry BII. Builders who ask a client to sign on as an owner-builder to sidestep the insurance are engaging in an arrangement CBS describes as often illegal.

What to do about it

Get the policy before you take a dollar and before anyone lifts a shovel. Give the certificate to the owner and lodge it with the council or private certifier.

Fix your contract templates and your quoting threshold at $20,000, not $12,000. Tell owners plainly what BII is not: it will not help them while you are still trading and the dispute is about workmanship.