Private insurers can now provide protection for NSW homeowners against incomplete and defective construction work, under changes to the Home Building Compensation Fund program.

The NSW Government-owned Insurance & Care has previously been the sole provider of home building insurance, which must be obtained by builders.

The new scheme gives homeowners minimum coverage of $340,000 for defects and $340,000 for non-completion.

From July 1 it also requires builders to disclose in their contract with homeowners the amount of home building compensation insurance they have.

Finance, Services and Property Minister Victor Dominello says the “long overdue” changes provide a safety net for homeowners if a builder cannot complete residential work or fix defects due to insolvency, death, disappearance or licence suspension.

“NSW is experiencing a building boom, so it is critical that homeowners are adequately protected,” he said. “The new laws mean there is an opportunity for new providers to enter the market and offer competitive products while safeguarding homeowners.”

All builders are required to take out cover under the Home Building Compensation Fund scheme for residential projects costing more than $20,000.