The NSW Government’s insurance guidance, updated 6 July 2026, says that from 1 July 2027 a registered NSW building practitioner must be indemnified under an insurance policy for work they carry out as a registered building practitioner, in addition to taking out Home Building Compensation (HBC) cover. That future practitioner duty is separate from the existing rule requiring HBC cover for each home building project over $20,000 including GST. Figures checked 1 October 2026.
What changes on 1 July 2027?
The new requirement concerns the insurance under which a registered building practitioner is indemnified for their work. It does not replace the requirement to take out HBC cover.
The NSW Government also states that registered design practitioners and professional engineers must have professional indemnity insurance. That insurance may be provided under an individual, partnership or corporate policy.
These requirements should be considered separately. HBC cover is not presented as a substitute for the insurance needed to indemnify a practitioner for their work.
How does practitioner indemnity differ from HBC cover?
| Requirement | Who it applies to | Threshold or timing | Main purpose or action |
|---|---|---|---|
| HBC cover | A licensed builder or tradesperson in NSW | Each home building project over $20,000 including GST | Protects homeowners as a last resort if building work cannot be completed or defects cannot be fixed |
| Practitioner indemnity insurance | A registered building practitioner | Required from 1 July 2027 for work carried out in that role | Must be held in addition to HBC cover |
| Professional indemnity insurance | Registered design practitioners and professional engineers | Requirement stated separately in the NSW Government guidance | May be provided through an individual, partnership or corporate policy |
| Consumer insurance check | A person contracting an individual or business | More than $20,000 of home building work | Check that the business has valid insurance before paying money or a deposit and before work starts |
HBC cover, formerly called home warranty insurance, therefore answers a different question from practitioner indemnity insurance. The first protects homeowners in specified circumstances; the second supports the practitioner’s obligation to be indemnified for work carried out as a registered building practitioner.
Does $20,000 set the minimum practitioner indemnity amount?
No. The figure of $20,000 including GST is the HBC project-value threshold described in the NSW Government guidance. It is not stated there as a minimum limit for practitioner indemnity insurance.
The cited guidance does not provide a universal dollar minimum for the indemnity policy. Instead, each practitioner must assess whether the cover is adequate for their own circumstances.
How should practitioners assess whether their cover is adequate?
The NSW Government directs practitioners to consider factors including:
- their financial resources;
- the risks associated with their work;
- the limits of the proposed policy; and
- other factors outlined in the Design and Building Practitioners Regulation 2021.
Different practitioners have different business risks, so a policy that suits one practice may not suit another. The assessment should therefore be based on the practitioner’s work, financial position and other relevant circumstances—not simply on a general dollar figure.
Practitioners must make sure the policy provides adequate cover to indemnify them for their work. They may also need to show that they have assessed its adequacy and should seek independent advice about the amount and type of cover needed.
What should a person check before paying for building work?
If a person contracts an individual or business for more than $20,000 of home building work, the NSW Government advises them to check that the business has valid insurance for the work. This check should happen:
- before paying any money, including a deposit; and
- before the work starts.
Use the HBC Check online tool to complete the check.
What should readers verify before relying on this summary?
This is general information, not financial or legal advice. Check the NSW Government regulator guidance and your policy’s PDS for the current requirements and terms. The NSW Government also directs readers to the State Insurance Regulatory Authority website for further information.
Sources
FAQ
Does HBC cover satisfy the practitioner indemnity duty from 1 July 2027?
No. From that date, a registered building practitioner must be indemnified under an insurance policy for work carried out in that role, in addition to taking out HBC cover.
Is $20,000 the minimum practitioner indemnity policy limit?
No. The $20,000 including GST figure is the HBC project threshold in the cited guidance. The NSW Government does not state a universal dollar minimum for practitioner indemnity cover.
What should a building practitioner consider when choosing indemnity insurance?
Consider your financial resources, the risks associated with your work, the policy limits and the other relevant factors in the Design and Building Practitioners Regulation 2021. Seek independent advice if needed.
When should a person check a builder’s or tradesperson’s insurance?
For home building work worth more than $20,000, check that the business has valid insurance before paying any money, including a deposit, and before the work starts. Use the HBC Check online tool.
Partner links. Using them costs you nothing extra and may earn us a commission.