Residential Building Insurance in Tasmania: There Is No Home Warranty Scheme

What it is

Tasmania has no compulsory home warranty insurance scheme. A Tasmanian builder does not buy it, cannot buy it as a statutory product, and does not hand the owner a certificate before taking a deposit.

Every other Australian jurisdiction requires some form of compulsory last-resort cover. A builder arriving from Victoria expects to buy Home Warranty, from New South Wales an HBCF certificate, from Queensland QBCC home warranty cover, from South Australia building indemnity insurance. The Northern Territory delivers its cover as a fidelity fund certificate rather than an insurance policy. The ACT allows either. In Tasmania there is nothing to buy, and a homeowner who assumes otherwise will be badly wrong about what happens if their builder goes under.

The absence has a history. The Housing Indemnity Act 1992 (Tas) ran a compulsory scheme from 1993. It became last-resort in 2003 after the HIH collapse, and in 2008 the requirement was removed altogether, leaving Tasmania as the only state without the cover.

Legislated but not started

The Residential Building (Home Warranty Insurance Amendments) Act 2023 (Tas) was passed to reintroduce home warranty insurance. It has not started. The Act commences on a day or days to be proclaimed, and it has not been proclaimed.

Treat the scheme as coming, not current.

What actually protects the owner

The Residential Building Work Contracts and Dispute Resolution Act 2016 (Tas) is the core statute. It applies to residential building work contracts worth $20,000 or more and implies statutory warranties into every one of them. They cannot be contracted out, and they pass to a later owner if the home is sold.

The warranties promise that:

• materials will be good quality, suitable and new unless the contract says otherwise
• the work will comply with all laws, including the National Construction Code and the Building Act 2016 (Tas)
• the work will be done in an appropriate and skilful way, with reasonable care and skill
• the home will be suitable for occupation once complete
• the work will be done with reasonable diligence

Warranties run for six years from practical completion, and proceedings for breach must be started inside that window. The Australian Consumer Law sits alongside them and supplies consumer guarantees in its own right.

The defect and dispute pathway

The building surveyor engaged by the owner inspects the work during construction and may issue an Inspection Direction requiring defects to be rectified. After completion, if the surveyor or the Director of Building Control certifies work as defective within 24 months of a Certificate of Completion, a Defective Work Order is issued.

For contractual defects, the owner raises the issue with the builder, then lodges a notice of dispute with the Director of Building Control. If it is accepted, a mediation panel is set up. There is no application fee, though the parties usually share the mediator costs, and once mediation begins the parties have 20 days to reach agreement.

If mediation fails, the matter goes to TASCAT, which can order compensation or require the work to be completed to the contracted standard.

The gap is obvious. Every step of this assumes a builder who still exists. If the builder is insolvent, there is no insurer standing behind the warranties and no fund to finish the house.

What a Tasmanian builder actually carries

There is no statutory cover to buy, but a competent Tasmanian builder still holds commercial insurance. Owners should ask for the certificates of currency:

• Public liability for injury to third parties and damage to their property
• Contract works for damage to the works during construction, including fire, storm and theft
• Professional indemnity where the builder carries design responsibility
• Workers compensation for employees

None of these protect the owner against the builder becoming insolvent. That is the hole in the Tasmanian system, and it is the hole the 2023 Act is meant to fill.

What to do about it

Builders: do not import a home warranty clause from a mainland contract template. Get the Residential Building Consumer Guide to the owner before the contract is signed, and respect the deposit caps of 10 per cent between $20,000 and $50,000, 5 per cent at $50,000 or more, and 20 per cent where more than half the work is off-site.

Owners: check the licence, ask for the certificates of currency, and keep progress payments tight against work actually completed. If the builder fails mid-build, the loss is yours.