According to the Queensland Building and Construction Commission (QBCC) in its What is home warranty insurance guidance, updated 11 May 2025, home warranty insurance is compulsory for residential construction work valued at more than $3,300—including materials, labour and GST—and pays a maximum of $200,000 on claims. For a cost-plus contract, however, the QBCC says the scheme’s cover is limited to defective-work claims and does not cover non-completion; fixed-price residential contracts can be covered for both claim types.
Figures checked 1 October 2026.
This is general information, not financial or legal advice. Check the current QBCC regulator page and your policy’s PDS for the terms that apply to your contract.
Is home warranty insurance compulsory on a cost-plus job?
Yes. The requirement to carry home warranty insurance and the scope of protection are separate questions. A relevant cost-plus residential project over the threshold can require insurance even though that insurance does not cover non-completion.
The QBCC explains that:
- the contractor pays the premium to the scheme;
- the contractor collects it from the homeowner;
- it is included in the homeowner’s contract; and
- it is paid before work begins.
For a project above the threshold, the QBCC recommends checking that each quote includes the home warranty insurance premium so the quotes can be compared accurately.
| Contract type | Insurance required for relevant residential work over $3,300? | Defective-work claim | Non-completion claim |
|---|---|---|---|
| Fixed-price | Yes | Can be covered | Can be covered, but QBCC says this requires a fixed-price residential contract with a licensed contractor |
| Cost-plus | Yes | Can be covered—the only listed type of cover | Not covered |
Before signing, homeowners should:
- Check whether the quote is fixed-price or cost-plus.
- Confirm how the contract total treats materials, labour and GST.
- Check that the home warranty insurance premium is included in the quote.
- If non-completion protection is important, confirm that the contract is fixed-price and the contractor is licensed.
- Keep the signed contract and payment records.
What happens if a cost-plus contractor does not finish the work?
A non-completion claim arises when the contractor does not, or cannot, finish the contracted work. The QBCC says a non-completion claim under the scheme requires a fixed-price residential contract with a licensed contractor.
The contract type matters because the scheme needs to know the amount agreed under the contract to finish the work. A cost-plus contract has no certainty about the final price, so the QBCC says it cannot quantify whether the homeowner has suffered a loss.
That is why home warranty insurance can be compulsory while a cost-plus contract remains outside the scheme’s non-completion protection. A defective-work claim may still be available if the contractor does not fix defects.
Why does the QBCC recommend fixed-price residential contracts?
The QBCC’s Home warranty insurance: A guide for homeowners, updated 24 January 2025, strongly recommends avoiding cost-plus contracts. It says they can be complex, often lead to misunderstandings about home warranty insurance and can limit Scheme protections.
The QBCC’s broader scheme guidance also recommends using only fixed-price residential contracts. This does not mean cost-plus work never needs insurance: the obligation to insure relevant residential work remains, but the claim protection is narrower.
Is every building project covered by the scheme?
No. Home warranty insurance applies only to residential construction work. It is not home and contents insurance and does not cover commercial building projects.
The QBCC’s homeowner guide identifies work that does not require Scheme cover, including:
- work in or for multiple-unit dwellings with more than three storeys, excluding a mainly carpark storey;
- work at registered retirement village, commercial or industrial premises;
- work on roofed buildings that are not residences, such as farm sheds or horse arenas; and
- work whose amended scope brings its total value below the regulated $3,300 threshold.
Anyone unsure whether a project is insurable should consult the QBCC’s detailed A to Z guide of insurable work.
What can limit or affect a claim?
The maximum Scheme payment and the availability of cover are not automatic. Homeowners should consider the following:
| Issue | QBCC position |
|---|---|
| Maximum payment | Home warranty insurance pays up to a maximum of $200,000 on claims |
| Contractual limits | Claims are subject to limitations and some exclusions |
| Excess payment | Cover is affected if the homeowner pays the contractor more than allowed by law or under the contract |
| Recovery from the contractor | After paying a claim, the Scheme tries to recover the amount paid to finish or fix the work from the contractor |
A defective-work claim concerns defects the contractor does not fix. QBCC guidance also identifies subsidence and settlement as circumstances that can support a claim.
Does the cover follow the home or the contractor?
The insurance covers the property, so it remains in place if the home is sold. A person making a claim does not have to be the person who originally contracted the building work.
A home buyer or the buyer’s legal agent can search for home warranty insurance attached to the property. The insurance cannot be transferred between contractors, however, so replacing one contractor does not transfer the existing cover to the replacement.
How long does the cover last?
QBCC materials provide the following timing guidance:
- The detailed Scheme page states that cover lasts for 6 years and 6 months from the earliest of contract entry, premium payment or commencement of work.
- If the residential construction work took more than 6 months to complete, cover can be extended by 6 months from the cover commencement day.
- The homeowner guide describes structural-defect cover as generally lasting 6 years and 6 months from the contract date, while non-structural work typically has cover for around 6 months from completion.
- Specific circumstances may vary. A claim must be made within the timeframe for its type, and cover cannot be renewed after it expires.
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 compulsory if my quote is cost-plus?
Yes, if the work is otherwise insurable residential construction work above the threshold. The contractor must carry the insurance, but cost-plus cover is limited to defective-work claims.
Can I claim if a cost-plus contractor will not finish the job?
A non-completion claim under the Queensland Home Warranty Scheme requires a fixed-price residential contract with a licensed contractor. The Scheme cannot quantify a cost-plus non-completion loss because the final price is uncertain.
Does a cost-plus contract have no home warranty protection at all?
It still has defective-work protection. The QBCC states that cost-plus contracts are covered only for defective-work claims, not non-completion claims.
How much can the Scheme pay?
The Scheme pays up to a maximum of $200,000 on claims. The actual amount is subject to the policy’s limitations, exclusions and claim requirements; the maximum is not an automatic payout.
Does home warranty cover continue after the home is sold?
Yes. Because the insurance attaches to the property, it remains in place after sale, and a later owner does not have to be the person who originally contracted the work.
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