The Tasmanian Government has moved a step closer to reintroducing mandatory home warranty insurance to protect homeowners from incomplete and defective work or loss of deposits. 

Attorney General Elise Archer has tabled the Home Warranty Insurance Bill in Parliament. An earlier scheme was axed by the former Labor Government in 2008. 

The collapse of Tasmanian Constructions and Inside Out Constructions in November 2021 prompted the State Government to reintroduce the scheme, which would use a “last resort” model consistent with most Australian jurisdictions. 

Under the bill, the protections require builders to take out home warranty insurance for the benefit of a homeowner and successors in title. 

Homeowners will be covered for the loss of deposits, non-completion, and defects. These are subject to various financial caps where a builder has died, disappeared, or become insolvent. 

There is an application trigger of $20,000, a six-year warranty period and a definition of residential building work that all align with the Residential Building Work Contracts and Dispute Resolution Act 2016. 

“We recognise that building a home is the most significant investment many Tasmanians will make,” Ms Archer said. 

“Our Home Warranty Insurance scheme will provide important protections to ensure that homeowners are covered for loss caused by incomplete or defective building work should unforeseen circumstances occur.” 

The National Insurance Brokers Association (NIBA) made a submission to the consultation, supporting the reintroduction of the scheme, alongside complementary reforms to reduce risk and ensure its long-term viability. 

“With average property prices in Tasmania at an all-time high, it is more important than ever that Tasmanians are protected if something goes wrong,” NIBA CEO Philip Kewin said. 

NIBA also warned that without strong building codes and reforms to prevent “illegal phoenixing” the long-term viability of the scheme is likely to be jeopardised. Phoenixing is when a new company is created to continue the business of an existing company that has been deliberately liquidated to avoid liabilities. 

NIBA said the last resort scheme was the “most effective way to balance the benefit to homeowners with the economic impact premiums have on property prices”.