When a builder finishes work that later turns out to be faulty, the financial hit can be steep. In New South Wales, a recent case saw homeowners discover significant water ingress and defective waterproofing after a 2018 build, with the tribunal finding structural defects that made the home uninhabitable. That situation raises a question many property owners face: can your insurance cover a builder’s blunder, or are you left chasing the builder yourself?
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Understanding the difference between what your insurance covers and what falls under a builder’s warranty is the first step. Home warranty insurance, also called building defects insurance, exists specifically to protect homeowners from the financial consequences of defective workmanship, incomplete work, and non-compliance with building codes. But the rules around claiming are strict, and the timeframes are unforgiving. Here’s what you actually need to know.
If you’re in the middle of a project, it’s worth understanding how property insurance for construction projects differs from standard home cover. The two are not the same, and mixing them up can leave you exposed.
The central concept here is the statutory warranty — a set of legal guarantees that apply to every residential building project under the Home Building Act 1989 (NSW).
What I tend to notice is that many homeowners assume their builder’s insurance will cover everything. In reality, the warranty period, the type of defect, and the timing of your claim all determine whether you’re covered or left paying out of pocket.
What happens when defective workmanship goes unaddressed
When a builder’s blunder isn’t fixed, the consequences ripple beyond the obvious repair bill. In the Keogh v Samchris case, water ingress from defective waterproofing and an incorrectly installed window made the home uninhabitable. That’s not just a leak — it’s a home you can’t live in, with costs for alternative accommodation, storage, and lost rental income piling up.
The tribunal in that case allowed claims for structural defects as major defects, which fell within the six-year warranty period. But cosmetic claims — like the incorrectly installed window — were dismissed as non-major defects because they fell outside the two-year window. That distinction matters enormously. A defect that looks minor at first can become a major problem if you miss the deadline.
Different states have similar but not identical rules. Queensland’s QBCC legislation mirrors the NSW approach, but the specifics vary. If you’re dealing with a defect, the first question isn’t “who pays” — it’s “what kind of defect is this, and when was completion?” Those two answers determine everything that follows.
Worth weighing against this: your standard home insurance policy almost never covers defective workmanship. It covers sudden events — storms, fires, burglaries — not gradual failures caused by poor construction. That’s why building versus contents insurance distinctions matter more than most people realise.
Where homeowners get tripped up
Mistaking the warranty period for a suggestion
Courts enforce these timeframes strictly. In the Keogh case, the homeowners’ claim for the incorrectly installed window was dismissed because it fell outside the two-year period for non-major defects. A claim filed days after expiry is still too late. The clock starts from practical completion or the issue of an occupation certificate — whichever comes first. If you’re unsure which date applies, check your contract and your certificate. One common misunderstanding is that the warranty period resets when you discover the defect. It doesn’t. Only latent defects — those genuinely undiscoverable with reasonable diligence — may extend the timeframe, and that requires expert evidence.
Assuming the builder’s insurance covers everything
Home warranty insurance covers specific things: repair, replacement, and rectification of defects during the policy period. But it excludes wear and tear, lack of maintenance, intentional damage, pre-existing conditions, and natural disasters. If your builder goes bankrupt, the insurance may step in. But if the builder is still trading and simply refuses to fix the work, your first move is to pursue the builder through the statutory warranty, not the insurer. The insurance is a backstop, not a first port of call.
Failing to document defects properly
A verbal complaint to the builder is not enough. The Keogh case succeeded because the homeowners had evidence — inspection reports, photographs, and a clear record of communications. Without that, the tribunal would have had little to go on. Written notice to the builder should include your contact information, the date, a detailed description of the problem, and supporting documentation. Use registered post or email with delivery confirmation. A formal record creates a paper trail that matters if the case escalates to a tribunal or court.
Overlooking the builder’s possible defence
Builders can defend themselves under section 18F of the Home Building Act if they followed written instructions from an independent professional — an architect, engineer, or surveyor. In the Keogh case, the builder tried this defence, arguing the engineer’s instructions caused the defects. The tribunal rejected it because the engineer was not independent during construction — the builder had directly engaged the engineer for revisions. This is a narrow defence, but it exists. If your builder raises it, you need to examine who instructed whom and when.
For keeping a clear record of communications and site conditions, a construction site camera can help document progress and potential issues over time.
How to pursue a claim for defective workmanship
Identify the defect type and warranty period
Before you do anything else, classify the defect. Structural defects affect the stability or load-bearing capacity of the building — foundation problems, cracks in load-bearing walls, sagging floors, roof structural issues. Non-structural defects affect aesthetics or function — plumbing faults, electrical faults, water leaks, poor insulation, defective windows, cosmetic flaws. In NSW, structural defects have a six-year warranty period; non-structural defects have two years. Get this wrong, and you might waste time pursuing a claim that’s already expired.
Notify the builder in writing
Send a formal notice to the builder with your full contact details, the date, and a detailed description of each defect. Attach photographs, inspection reports, and any expert opinions you’ve obtained. Reference the specific clauses in your contract or the statutory warranties if you can. Use registered post or email with a read receipt. The builder is then required to respond promptly — typically within 14 to 28 days, depending on the complexity of the defect and the terms of your contract. If the builder delays beyond a reasonable timeframe without justification, that delay itself may constitute a breach of statutory warranty obligations.
Document the builder’s response and any rectification work
If the builder agrees to fix the problem, get the proposed solution in writing. What will they do? By when? Using what materials? Keep a record of every communication and every site visit. If the builder denies liability or fails to respond, you have options: alternative dispute resolution, a complaint to NSW Fair Trading, or legal action in the NSW Civil and Administrative Tribunal (NCAT). The Keogh case was heard in NCAT, which handles residential building disputes up to certain monetary limits.
Consider home warranty insurance as a fallback
If the builder has died, disappeared, or become insolvent, home warranty insurance may cover the cost of rectification. But you need to check your policy carefully. Coverage typically includes labour, materials, and associated expenses necessary to address identified defects. Exclusions are broad: wear and tear, lack of maintenance, intentional damage, pre-existing conditions, natural disasters, and extreme weather events are all common carve-outs. The insurer will assess the claim based on the policy terms, not on whether the builder did a bad job.
For those managing a property with ongoing risks, a video doorbell camera can help monitor for water damage, break-ins, or other issues that might affect your insurance claim later.
Frequently asked questions
Can I claim on my home insurance for defective workmanship? ▾
What if my builder goes bankrupt before fixing the defects? ▾
Does the warranty period start from the contract date or completion? ▾
Can I sue the builder directly instead of claiming insurance? ▾
What counts as a structural defect? ▾
What if I discover a defect after the warranty period ends? ▾
Your next move after discovering a builder’s blunder
The Keogh case shows that homeowners can win — but only when they act within the right timeframe, classify defects correctly, and document everything. The tribunal rejected the builder’s defence because the engineer wasn’t independent, but that outcome depended on the specific facts. Your situation will be different, and the rules are unforgiving.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Neighbour Disputes and Property Damage: Who Pays in Australia?
Sources and Further Reading
Accidental Damage Coverage: The Often Overlooked Property Insurance Essential — Explains how accidental damage cover differs from standard policies and when it might apply to construction mishaps.
False Sense of Security: Common Property Insurance Myths Debunked for Australians — Covers widespread misunderstandings about what property insurance actually covers.
Bartier Perry (2024). Who’s liable? Builders, Consultants and home building claims. 🔗
Contracts Specialist (n.d.). How to Make a Claim Under Your Builder’s Warranty. 🔗
