According to the Queensland Building and Construction Commission (QBCC) guidance updated 11 May 2025, both fixed-price and cost-plus residential contracts require the compulsory home warranty premium when work is valued at more than $3,300, including materials, labour and GST. Under the same guidance, fixed-price cover can include non-completion and defective-works claims, while cost-plus cover is restricted to defective-works claims; claims are paid up to a maximum of $200,000. The guidance also states that cover lasts 6 years and 6 months from the earliest of contract entry, premium payment or commencement of work; figures checked 1 October 2026.
Does the contract type change the premium or the protection?
The contract type does not change whether the premium is compulsory above the threshold. It does change the claim protection available.
| Contract type | Home warranty premium | Non-completion claims | Defective-works claims |
|---|---|---|---|
| Fixed-price | Required for residential construction work valued at more than $3,300, including materials, labour and GST | Can be covered where the contractor does not or cannot finish the work, under a fixed-price residential contract with a licensed contractor | Can be covered where the contractor does not fix defects |
| Cost-plus | Required on the same residential-work terms | Not covered | Covered only for defective works |
The difference arises when the scheme calculates a loss. For a fixed-price non-completion claim, it needs to know the amount agreed under the contract to finish the work. A cost-plus contract has no certain final price, so the QBCC says the scheme cannot quantify whether the homeowner has suffered a loss.
These rules apply to residential construction work, not commercial building projects. The Queensland Government administers the Scheme through the QBCC.
Who arranges the premium?
The contractor is responsible for arranging the insurance, even though the cost ultimately forms part of the homeowner’s contract.
- The contractor collects the premium from the homeowner and pays it to the Scheme.
- The premium is included in the contract.
- It is paid before work begins.
- For a project valued at more than $3,300, the premium should appear in each quote so the quotes can be compared accurately.
- Contractors must include the cost of obtaining the insurance or face significant penalties.
The actual premium should therefore be identified in the contract rather than treated as an optional builder margin.
Why does fixed price matter for non-completion?
A non-completion claim can only be made under the Scheme for a residential project covered by a fixed-price residential contract with a licensed contractor. The agreed contract amount helps the scheme determine what would be required to finish the work.
Cost-plus terms do not provide that certainty. Although the premium remains compulsory, a cost-plus contract is limited to defective-works claims and cannot support a non-completion claim.
The QBCC’s homeowner guide, published 24 January 2025, says cost-plus contracts can be complex, create misunderstandings about home warranty insurance and limit Scheme protections. It strongly recommends avoiding them. The QBCC’s consumer guidance also says to use only fixed-price residential contracts.
What are the claim and time limits?
The QBCC’s 11 May 2025 guidance sets out the following general limits and periods:
| Issue | QBCC position |
|---|---|
| Maximum claim payment | Home warranty insurance pays up to $200,000 on claims |
| Limitations | Claims are subject to limitations and some exclusions |
| General cover period | 6 years and 6 months from the earliest of contract entry, premium payment or commencement of work |
| Longer project | Cover can be extended by 6 months from the cover commencement day if the residential work took more than six months to complete |
| Claim timeframes | The applicable timeframe depends on the type of claim |
| Renewal | Cover cannot be renewed after it expires |
The duration does not remove the need to act promptly. Check the current claim timeframe for the type of loss before contacting the Scheme.
What should be checked before signing?
- Confirm that the project is residential construction work to which the Scheme applies.
- Check that the contract total includes materials, labour and GST when applying the threshold.
- Ask for the home warranty premium to be shown separately within every quote.
- Identify whether the contract is fixed-price or cost-plus.
- If non-completion protection matters, check that the contract is fixed-price and the contractor is licensed.
- Read the policy’s PDS for limitations, exclusions, claim timeframes and applicable cover periods.
- Do not pay more than the law or contract allows because doing so can affect the insurance.
- Check whether the contractor has changed, as home warranty insurance cannot be transferred between contractors.
- Remember that home warranty insurance is separate from home and contents insurance.
This is general information, not financial or legal advice. Check the current QBCC regulator page and the policy’s PDS before signing a contract or making a claim.
Sources
- What is home warranty insurance | Queensland Building and Construction Commission
- Home warranty insurance: A guide for homeowners | Queensland Building and Construction Commission
FAQ
Is home warranty insurance optional on a cost-plus job?
No. A cost-plus residential contract above the QBCC threshold still attracts the compulsory premium. Its claim protection is restricted to defective works rather than non-completion.
Why is a cost-plus contract not covered for non-completion?
The final price is not certain under a cost-plus contract. The QBCC says this prevents the Scheme from quantifying whether the homeowner has suffered a loss.
Does the premium provide the same protection for both contract types?
No. The premium is required for both, but fixed-price contracts can be covered for non-completion and defective works. Cost-plus contracts are covered only for defective works.
Does cover end if the home is sold?
No. The insurance is attached to the property and remains in place if the home is sold. A buyer or the buyer’s legal agent can search for any policy attached to the property.
Can cover move to a replacement contractor?
No. Home warranty insurance cannot be transferred between contractors. Claim timeframes also depend on the claim type, so check the current QBCC information and the policy’s PDS.
Partner links. Using them costs you nothing extra and may earn us a commission.