HBCF Claim Process in NSW: Death, Disappearance, Insolvency or Licence Suspension

What it is

The Home Building Compensation Fund (HBCF) is the NSW statutory insurance scheme administered by icare on behalf of the State Insurance Regulatory Authority. It sits on top of the residential building contract as a last resort consumer protection. A builder in NSW who contracts to perform residential building work valued at more than $20,000 must take out an HBCF certificate of insurance before accepting a deposit or starting work. The requirement comes from Part 6 of the Home Building Act 1989 (NSW). The homeowner cannot purchase the cover directly. The builder pays the premium and the homeowner is named as the insured party on the certificate.

HBCF cover applies to single dwellings, dual occupancies, multi-unit developments up to three storeys and most home renovations. It does not cover commercial work, large strata developments above three storeys, owner-builder work or work where no certificate was issued.

When you can claim

Section 99 of the Home Building Act 1989 (NSW) lists the four trigger events. A homeowner can lodge an HBCF claim only if the builder:

• has died;
• has disappeared (the homeowner has made due search and inquiry and cannot find the builder);
• has become insolvent (for a company this includes liquidation, voluntary administration or a deed of company arrangement; for a sole trader it means bankruptcy); or
• has had their NSW builder licence suspended for a period of more than 12 months because of failure to comply with a money order from a court or tribunal.

The licence suspension trigger is unique to NSW. The other three triggers are mirrored in Victoria, Queensland and WA but the suspension trigger is not.

What is covered

HBCF covers:

• the loss of any deposit you paid before work started, capped at 20% of the contract price;
• the additional cost of having another builder finish incomplete work; and
• the cost of rectifying defective work, including major defects for six years from completion and other defects for two years from completion.

The total cover under one certificate is capped at $340,000 per dwelling under the Home Building Regulation 2014 (NSW). Within that cap, the sub-limit for incomplete work alone is 20% of the contract price as varied. Cover applies to both the original homeowner and any subsequent owner during the warranty period.

Time limits

Time limits are strict. A claim for incomplete work or loss of deposit must be lodged within 12 months of becoming aware of the loss. A defects claim must be lodged within six years for major defects and two years for non-major defects, both measured from completion. The clock starts when the homeowner reasonably became aware of the loss, not when the builder was first appointed.

icare can refuse cover outright if the claim is lodged late. Lodge as soon as a trigger event is confirmed. Do not wait for the liquidator to finalise the administration.

Step by step process

Step 1: confirm the trigger

Search the ASIC Insolvency Notices service for the builder's company name and ACN. For sole traders, check the National Personal Insolvency Index through the Australian Financial Security Authority. For the licence suspension trigger, search NSW Fair Trading's builder licence check. Take a screenshot dated on the day of search.

Step 2: secure the certificate of insurance

The certificate was provided when you paid your deposit. If you cannot find it, request a copy from the builder, the broker who arranged it or icare directly. icare maintains a record of every certificate issued.

Step 3: lodge through the icare HBCF claims portal

Lodge online through the icare HBCF claims service. Upload the contract, all variations, the certificate of insurance, the schedule of payments made, dated site photographs and proof of the trigger event (ASIC search, AFSA search or licence search result).

Step 4: independent assessment

icare or its claims agent will appoint an independent building consultant to inspect the site. The consultant prepares a scope of works for completion and a defects report. icare uses these to settle the claim. Be present at the inspection. Provide the consultant with the contract scope, plans and any prior reports.

Step 5: settlement options

icare can settle a non-completion claim in two ways: a cash payment based on the cost to complete or by engaging a replacement builder to finish the works under a new contract. The homeowner has limited input on the choice. Cash settlement is more common because rebuilding the contractual chain with a new builder takes months.

For defects, icare will usually issue a directions notice to the original builder where possible. If the builder cannot or will not rectify, icare pays the cost of rectification by an alternate builder.

Statutory insurance or court action

Lodging an HBCF claim is not strictly exclusive with NCAT or court proceedings but the two paths interact. Once an HBCF payment is made, icare takes subrogated rights to recover from the builder. The homeowner cannot then double-claim the same loss at NCAT. If a homeowner has already obtained an NCAT money order against the builder, the licence suspension trigger only crystallises after non-payment for the 12 month period.

When the cap is reached

If the cost to complete plus rectification exceeds $340,000, the homeowner is exposed for the balance. The remaining options are a proof of debt with the liquidator, a personal claim against directors under the Design and Building Practitioners Act 2020 (NSW) and direct claims against subcontractors or designers where they breached the statutory duty of care under that same Act.