Domestic building contracts and home warranty insurance by state

Western Australia's home indemnity insurance scheme caps cover for a lost deposit at $40,000, a figure that matters because it is often a fraction of what a homeowner has actually paid by the time a builder collapses partway through a job. Every state runs a different version of this safety net, with a different dollar trigger, and none of them replace the need to get the contract itself right first. Here is what a written contract must legally contain, and what home warranty insurance actually covers, state by state, as at 2026.

When does a domestic building contract have to be in writing?

The threshold varies by state and by nothing you'd guess from the contract price alone. In NSW, a written contract is only required for work priced above $5,000, and it must state the price, or explain why the price can't yet be fixed, if it exceeds $20,000. In Victoria, a written "major domestic building contract" is required for work worth more than $10,000. In Queensland, the QBCC's domestic building contract rules apply once work exceeds $3,300.

Below those figures, none of the three states legally requires a written contract, though every regulator recommends one anyway. Verbal agreements make it far harder to prove what was promised if a dispute ends up in a tribunal.

What must the contract actually contain?

For NSW contracts over $20,000, the law requires the date of signing, the full names of both parties including the builder's licence holder name, a sufficient description of the work with plans and specifications attached, and the statutory warranties set out in the Home Building Act 1989. The contract must also carry a clear statement of the five-day cooling-off period.

Victoria's Domestic Building Contracts Act 1995 requires a major domestic building contract to set the deposit amount, define the stages of the build and how much is payable at each stage, and restrict price changes to legitimate variations or prime cost and provisional sum items. Builders must give clients the Domestic Building Consumer Guide before the contract is signed.

Queensland requires contracts over $20,000 to be accompanied by the QBCC Consumer Building Guide, with progress payments tied to the actual value of work completed at each stage rather than an arbitrary schedule.

Home warranty insurance thresholds by state

Home warranty insurance is last-resort cover. It protects the homeowner, not the builder, if the builder dies, disappears, becomes insolvent, or ignores a tribunal order to fix defective or incomplete work. It does not cover ordinary disputes, delays, or defects while the builder is still trading and able to be held to the contract.

• NSW, icare Home Building Compensation Fund (HBCF): required by law for residential building work valued at more than $20,000. The builder must give the homeowner a certificate of insurance before work starts or any money, including a deposit, changes hands.
• VIC, Domestic Building Insurance (DBI): required for work over $16,000, with cover up to $300,000: the full amount for structural defects for six years, and non-structural defects for two years.
• QLD, Queensland Home Warranty Scheme (QBCC): required for residential work valued over $3,300, with a maximum payout of $200,000 per contract. Fixed-price contracts cover both non-completion and defective work claims; cost-plus contracts cover defective work only.
• WA, Home Indemnity Insurance (HII): required for residential building work over $20,000. Eligible homeowners can claim up to $40,000 for a lost deposit and up to $200,000 for incomplete or defective work if the builder dies, disappears, or becomes insolvent.

In each state, the builder is legally required to arrange this cover, and it must be in place before the homeowner pays a deposit or the builder starts work, not organised retroactively once something has already gone wrong.

Deposit and progress payment rules

Deposit caps exist precisely because home warranty cover has limits, and an oversized deposit is money at risk before any insurance applies. NSW caps every deposit at 10 per cent of the contract price, regardless of the job's size. Victoria allows 10 per cent on contracts under $20,000 and cuts that to 5 per cent at or above it. Queensland runs three tiers: 20 per cent on jobs up to $3,300, 10 per cent from $3,301 to $19,999, and 5 per cent from $20,000 up, with a higher 20 per cent allowed only where more than half the contract value is customised off-site prefabrication.

Progress payments in Queensland must be proportionate to work actually completed on site, and a builder cannot claim more than half the contract price until at least half the on-site work is done. Victoria's contracts must set out defined stages and the amount payable at each. In NSW, a homeowner is not required to pay a deposit or any progress payment until the builder has provided the certificate of insurance for that property.

Cooling-off periods

NSW and Queensland both give homeowners five clear business days to withdraw from a contract without penalty, starting from the day after they receive the signed copy, for contracts over $20,000 in NSW and $3,300 in Queensland. Withdrawing in Queensland costs $100 plus any out-of-pocket expenses the contractor has reasonably incurred. Victoria applies the same five-business-day window to major domestic building contracts. In all three states, getting the contract reviewed by a lawyer before signing typically ends the cooling-off right, and a repeat contract with the same builder for the same job is usually excluded too.

What to do before signing

Check the builder's licence matches the name on the contract, confirm the price and payment stages are spelled out rather than left open, and ask for the certificate of insurance for your specific property before you pay a deposit. NSW's contract checklist is a useful walk-through even outside NSW, since the underlying questions, licence, price, insurance, cooling-off, apply everywhere. For the licence and insurance checks that come before any contract, see our guide on how to choose a home builder. Browse licensed home builders on Digital Pages to start a shortlist, and if the work is a renovation rather than a new build, the same contract and deposit rules apply, see our renovations listings for specialists in that scope of work.

FAQ

Do I still need a written contract for work under the insurance threshold? Often yes, just not the same one. NSW requires a written contract above $5,000 even though HBCF cover only kicks in above $20,000. Victoria's major domestic building contract threshold is $10,000, well below its $16,000 insurance trigger. Check your state's contract threshold separately from its insurance threshold.

Can my builder ask for the full deposit before starting work? No state allows that. NSW caps every deposit at 10 per cent. Victoria allows 10 per cent under $20,000 and 5 per cent at or above it. Queensland runs three tiers: 20 per cent up to $3,300, 10 per cent from $3,301 to $19,999, and 5 per cent from $20,000 up.

What happens if I sign a contract without home warranty insurance in place? In NSW and WA, taking a deposit or starting work without the required cover in place is unlawful, and any cover taken out afterwards may not protect that specific job. Ask for the certificate of insurance before you pay anything, not after.

Is home warranty insurance the same as a builder's public liability insurance? No. Home warranty insurance (HBCF in NSW, DBI in Victoria, the QBCC scheme in Queensland, home indemnity insurance in WA) is last-resort cover for the homeowner if the builder dies, disappears, becomes insolvent, or ignores a tribunal order. Public liability insurance covers injury or property damage during the build and does not protect you if the builder simply fails to finish.

Can I cancel a building contract after signing it? Only within the statutory cooling-off window, and only in some states. NSW and Queensland both give five clear business days on contracts over their respective thresholds, starting from when you receive the signed copy. Victoria gives five business days on major domestic building contracts. Getting the contract reviewed by a lawyer before signing typically ends your cooling-off right in Victoria and Queensland.