The NSW State Insurance Regulatory Authority (SIRA) is launching an audit of residential building businesses to ensure they have compulsory home building compensation (HBC) insurance. 

For each residential building project businesses in NSW undertake, worth more than $20,000, they must buy HBC Insurance. 

It includes building, trades or specialist work done to a home, such as the construction of a house or an apartment building up to three storeys, or renovation or alterations to residential buildings of any number of storeys, and home additions such as swimming pools. 

“Some businesses have been taking money from customers or starting building work without insurance, and in some cases, not buying insurance at all. This unlawful conduct has caused considerable financial loss to some homeowners,” SIRA said. 

SIRA said recent building company insolvencies have shown the importance of compulsory home building insurance to protect people building homes in NSW. 

“While most businesses do the right thing, there is a minority that are not complying,” SIRA said. 

Businesses must buy the insurance before requesting or accepting any money for the work (including a deposit) or beginning the residential building work. 

“The insurance protects homeowners as a last resort if a business can’t complete work on their home or fix defects,” SIRA said. 

The audit, starting in September, will initially look at 100 businesses building ‘Class 1’ homes such as houses or duplexes.  

“SIRA is prioritising businesses for audit based on the number of projects for which there are no matching insurance records, or for which the construction certificate and insurance dates indicate a risk that the work may have started or payments been taken before insurance was purchased. Selection for audit does not mean a business has done anything wrong, as there can be a lawful reason,” SIRA said.