Builders Warranty goes by different names in different States, and sometimes even in the same State, but while the legislation covering this in each State also varies, the concept remains basically the same.
WHEN IS IT NEEDED?
Where a professional builder / contractor performs residential work for a third party, where such works are of a substantial value (the threshold varies by State) they must provide a warranty certificate to the owner before the works commence. It’s mandatory in all States, except Tasmania.
WHAT DOES IT COVER?
The insurance cover itself is designed to provide financial compensation to the owner, for incomplete or defective works, in the event that the builder 1) dies, 2) disappears, or 3) is bankrupt. Because it is traditionally limited to those scenarios, it’s often referred to as an “insurance of last resort”. Some recent reform has improved this however. In VIC a 4th trigger “deregistration / loss of license” is added, which broadens the cover. Qld takes it further, and compensation is often available even without these 3-4 conditions being met.