What Is the Home Building Compensation Fund?
The Home Building Compensation (HBC) Fund in New South Wales provides a safety net for homeowners when a licensed builder or tradesperson is unable to complete work or fix defects due to insolvency, death, or disappearance. Previously known as the Home Warranty Insurance scheme, the fund is administered by NSW Fair Trading and icare.
In early 2026, the NSW Government announced several changes to the fund aimed at improving coverage for consumers and streamlining the claims process.
Key Changes for 2026
The updated rules introduce a number of important adjustments:
- Coverage threshold increase: The minimum contract value requiring HBC cover will increase from $20,000 to $25,000 (inclusive of GST), reducing the administrative burden on smaller jobs.
- Extended defects period: The structural defects coverage period will extend from 6 years to 7 years for contracts entered into after 1 July 2026.
- Faster claims processing: icare has committed to processing initial claims within 30 business days, down from the current average of 45 days.
- Digital certificates: HBC certificates will be issued digitally by default, with printed copies available on request.
What This Means for Builders
Licensed builders in NSW must continue to obtain HBC cover before accepting payment or commencing residential building work above the threshold. The key change is the increased threshold — jobs under $25,000 will no longer require a certificate, which should reduce costs for smaller renovations and repairs.
Builders should update their quoting processes to reflect the new threshold and ensure compliance with the revised requirements from 1 July 2026.
What This Means for Homeowners
If you’re commissioning residential building work in NSW valued over $25,000, your builder must provide you with an HBC certificate before starting work. This certificate is your protection if something goes wrong.
Before hiring a builder, always:
- Verify their licence with NSW Fair Trading or use our licence checker.
- Request the HBC certificate and confirm it covers your project.
- Understand what’s covered — the fund covers incomplete or defective work, not disputes over quality or variations.
Further Reading
For a deeper understanding of warranty insurance across all states, see our guide on home warranty insurance for Australian homeowners.