Nine construction firms in NSW have been cautioned by the state’s insurance regulator over failures to acquire compulsory home building compensation insurance.

The firms were responsible for 131 projects and failed to insure some of their customers’ deposits for home building work, putting the clients at risk of losing the deposits if the businesses became insolvent, the State Insurance Regulatory Authority (SIRA) says.

Home building compensation cover is mandatory if a project is valued at $20,000 or more, and builders must provide customers with certificates of insurance before starting work or accepting any payment including a deposit.

The insurance protects homeowners if a business cannot complete work on their home or fix defects.

“By identifying building businesses that do not hold [home building compensation] insurance for every job, people who invest their hard-earned money into building their family home are protected,” SIRA Acting CEO Petrina Casey said.

SIRA says the issues were identified by a compliance audit that began last August.

The audit relies on data-matching in collaboration with the Building Commission NSW, using planning data and Home Building Compensation Fund insurance records from state insurer icare, the main provider of the insurance.

“While cautions were considered appropriate in the circumstances of these nine building businesses, SIRA will also consider issuing penalty notices, referral to the Building Commission NSW or other enforcement actions, where warranted,” the regulator said.

SIRA says NSW Building Commissioner David Chandler has met with both the Housing Industry Association and the Master Builders Association and warned them members need to lift compliance with building standards and insurance rules this year.