QBBC Home Warranty Insurance – part 1

Part 5 of the Queensland Building and Construction Commission Act 1991 (the Act) establishes a statutory insurance scheme, the purpose of which is in certain situations to provide assistance to consumers of residential construction work.  As part of the building process, the builder pays a premium to the QBCC to insure the construction work, the amount of the premium being included as part of the contract price and paid to the QBCC before the residential construction work commences.

However, many consumers of residential construction work are uncertain about what is actually covered by, and when they may be entitled to make a claim under, the QBCC Home Warranty Insurance scheme.

What kind of building is and is not covered by the QBCC Home Warranty Insurance scheme?

Under section 67WC of the Act, primary insurable work is defined as building work valued at more than $3,300.00 (as at the time of writing) carried out by a licensed contractor, that building work, including for example:

• construction of a residence or related roofed building;
• work for anything attached or connected to a residence or related roofed building that requires building or plumbing approval;
• the erection, construction or installation of a swimming pool; or
• associated insurable work such as fencing, landscaping, electrical work, air-conditioning, driveways or paths, solar power units and the like.

67WD of the Act defines associated insurable work as any additional work that may be carried out under a contract for primary insurable work and is carried out on the site of the residence or related roofed building.

In other words, if the associated insurable work is not carried out under a contract for primary insurable work then the associated insurable work is not eligible for assistance under the QBCC Home Warranty Insurance scheme (see section 67WB(3) of the Act).

However, the exclusions under the QBCC Home Warranty Insurance scheme do not end there.

67WE of the Act defines residence as a structure fixed to land and used for residential purposes as follows:

• a single detached dwelling;
• one or more attached dwellings that are separated by a common wall, such as a townhouse; or
• a building of not more than three storeys containing two or more separate residential units.

For example, while a unit in a six-pack walk up may be covered under the QBCC Home Warranty Insurance scheme, a unit in a high-rise building is not covered, even though all the units in the building are used for residential purposes.

As the QBCC Home Warranty Insurance scheme is intended to assist homeowners, those involved in commercial ventures are not covered.

For example, no assistance is provided to a person who enters into one or more contracts, in force at the same time, to construct three or more dwellings or living units.

When can a claim be made under the QBCC Home Warranty Insurance scheme?

Under section 67X of the Act, the purpose of the QBCC Home Warranty Insurance scheme is to provide assistance to consumers of residential construction work for loss associated with work that is defective or not completed.

Non-completion

To make a claim for incomplete residential construction work, the contract must first have been validly terminated, either under the provisions of the contract or in reliance upon common-law entitlements.

For example, the builder abandons the works or unreasonably fails to complete the work.

Other grounds for a non-completion claim under the QBCC Home Warranty Insurance scheme include the contract terminating because of the death of a licensed contractor, the licensed contractor company being deregistered or the licensed contractor individual having his or her licensed cancelled.

A non-completion claim must be lodged within three months after the contract comes to an end.

Defects

A claim under the QBCC Home Warranty Insurance scheme can be made for un-remedied defective work.

Notice of the alleged defective work must first be provided to both the builder and the QBCC and the builder must be given a reasonable opportunity to comply with a notice to rectify issued by the QBCC.

Only if the builder fails to rectify the defects will a claim made in reliance upon the QBCC Home Warranty Insurance scheme be accepted.

Strict time limits apply regarding defective building work in that a complaint form must be lodged within three months of noticing a structural defect or within seven months of the completion date of the residential building work for non-structural defects.

Takeaways

QBCC Home Warranty Insurance is a statutory scheme providing basic protections to consumers of residential construction work. Future articles will discuss other limitations associated with the scheme.

Links and further references

Legislation

Queensland Building and Construction Commission Act 1991

Related insights

Top ways to avoid a building dispute in Queensland

Implications of non-compliance with the Queensland Building and Construction Commission Act (Qld) 1991

Why you should not engage an unlicensed building contractor

Termination for incomplete construction work

Further information about QBCC

Contact Dundas Lawyers Gold Coast for a confidential and obligation-free discussion:

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.