Insurance requirements differ by state
Owner-builder insurance requirements are not uniform across Australia. The permits, compulsory insurance arrangements and statutory protections that apply depend on the state or territory where the project is located.
For example, New South Wales does not simply require every owner-builder to purchase the same package of contract works and public liability insurance.
In NSW, an owner-builder permit is generally required where the reasonable market cost of the work, including labour and materials, exceeds $10,000 and you are supervising or carrying out the work on your own property rather than engaging a licensed builder to supervise it.[1]
NSW Government guidance strongly recommends that owner-builders take out public liability insurance because they may be legally liable for injury or property damage arising from the building work. However, public liability is described as recommended protection rather than a blanket statutory requirement under the Home Building Act.[3]
Contract works insurance is treated differently. NSW guidance recommends that the builders and trade contractors engaged by the owner-builder have contract works insurance to protect against loss or damage to materials and work. Owner-builders should therefore confirm what cover their contractors hold and separately assess whether they need their own construction insurance for exposures not otherwise protected.
Home Building Compensation insurance in NSW
Home Building Compensation, or HBC insurance, also operates differently for owner-builders.
An NSW owner-builder is not required, and is generally unable, to obtain HBC insurance for building work they perform themselves.
However, where a licensed builder or trades business contracts directly with an owner-builder to perform residential building work worth more than $20,000 including GST, that contractor will generally need to obtain HBC insurance before starting the work or accepting payment, unless an exemption applies.[3]
This means HBC insurance should not be described as an “owner-builder warranty policy” that the owner-builder simply buys for their own work.
Selling an owner-built property in NSW
If the property is sold within 7 years and 6 months after the owner-builder permit was issued, the contract for sale must include the required consumer warning stating that an owner-builder permit was issued in relation to the land.[2]
The owner-builder’s own work is not protected by HBC insurance, but statutory warranties can still benefit a subsequent owner.
Insurance to consider before work starts
Before construction begins, check the insurance requirements that apply to your project and jurisdiction. Owner-builder permits, building approvals and statutory insurance requirements vary between Australian states and territories.
You should also contact your existing home insurer before major construction or renovation work begins. Structural building work can affect your existing cover, and you should not assume a standard home policy automatically protects the property throughout construction.
Contract works insurance
Contract works insurance can cover insured loss or damage to construction work in progress, together with specified materials, fixtures and fittings.
Depending on the policy, insured events may include:
- Fire
- Storm and weather-related damage
- Theft or malicious damage
- Certain accidental damage during construction
Exactly what is covered depends on the policy wording, limits, excesses, security requirements and exclusions.
Public liability insurance
Public liability insurance can provide protection where an owner-builder becomes legally liable for covered third-party personal injury or property damage arising from the construction project.
Depending on the circumstances and policy, this could include claims involving:
- Third-party injury on or around the site
- Accidental damage to neighbouring property
- Covered legal defence costs
The appropriate level and scope of liability cover depends on the project, site exposures, insurer requirements and any applicable contractual or regulatory requirements.
What contract works insurance can protect
A property under construction presents different risks from a completed home. Parts of the structure may be exposed to weather, building materials may be stored on site and work may remain incomplete for months.
Contract works insurance is designed to address specified construction-period risks, subject to the particular policy.
Fire
A construction policy may cover insured fire damage to building work and materials within the scope of the policy.
Storm and wind
Partially completed structures can be particularly exposed to severe weather. Cover for storm, wind and water-related damage depends on the policy’s insured events, conditions and exclusions.
Theft
Some policies provide cover for theft of specified materials or fixtures. Security conditions and restrictions may apply, particularly to materials stored outdoors or items that have not yet been installed.
Accidental damage
Certain accidental damage to the works may also be covered. However, defective workmanship and the cost of correcting poor work should not automatically be treated as insured accidental damage. Check the policy for relevant exclusions and any provisions dealing with resulting damage.
Don’t assume your existing home insurance covers the project
Home insurance policies differ in how they treat renovations, extensions and structural building work.
If you’re renovating an existing property, tell your insurer about the proposed work before construction starts and confirm in writing what remains covered.
You should also establish whether the construction policy covers only the new works or also includes the existing structure.
Check how materials are insured
Materials can move through several locations before they become part of the finished building. They may be stored on site, kept at another location or transported to the project.
Do not assume all of these situations are automatically covered.
What to confirm before you buy
- Whether materials stored outdoors on site are covered
- Whether materials stored off-site can be insured
- Whether materials in transit are included
- Whether sub-limits apply
- What security conditions must be met
- When cover begins and ends for materials
Public liability: understanding the exposure
Construction sites create liability risks involving visitors, neighbours, delivery drivers and members of the public.
For example, a third party might be injured around the site, or construction activity could accidentally damage neighbouring property.
Where the owner-builder is legally liable and the claim falls within the policy, public liability insurance may respond to compensation and certain legal costs, subject to the policy’s terms, limits, exclusions and claims conditions.
Legal defence costs can be significant
Even where liability is disputed, responding to a claim can involve substantial legal expense.
Public liability policies may provide cover for certain defence costs associated with insured claims. How those costs are handled, including whether they sit within or outside the liability limit and when insurer consent is required, depends on the policy.
Don't rely solely on your tradespeople's insurance
Licensed tradespeople and contractors may carry their own public liability and other insurance, but their policies are intended to protect their respective businesses and activities.
Their insurance should not be assumed to protect you against every risk arising from the project.
As the owner-builder, you retain your own responsibilities for managing the project and should assess your construction and liability exposures separately.
It is also sensible to verify relevant licences and obtain current certificates of currency from contractors rather than assuming appropriate insurance is in place.
Other covers and requirements to consider
Contract works and public liability are important owner-builder considerations, but other insurance may become relevant depending on the project.
Victorian owner-builders: an additional requirement to check
If you’re acting as an owner-builder in Victoria, building regulations impose specific requirements.
For domestic building work valued at more than $20,000, an owner-builder generally needs a Certificate of Consent from the Building and Plumbing Commission before a building permit can be issued, unless an exemption applies.[4]
This is a regulatory requirement separate from construction insurance.
Victorian owner-builders should also check the current statutory requirements that may apply if an owner-built property is sold after completion.
Before you start, check that you have:
- Confirmed the owner-builder and building permit requirements for your state or territory
- Considered appropriate contract works insurance
- Considered public liability insurance appropriate to the project’s exposures
- Confirmed whether existing structures are insured
- Checked how materials stored outdoors, off-site or in transit are treated
- Notified your existing home insurer about the proposed building work
- Checked workers compensation requirements where workers or contractors are engaged
- Considered voluntary workers cover if friends or family will help
- Checked applicable statutory warranty or building insurance requirements
- Verified relevant contractor licences and certificates of currency
- Confirmed the policy period is sufficient for the expected construction schedule
Owner builder insurance: frequently asked questions
Is owner builder insurance a legal requirement in Australia?
There is no single Australia-wide rule requiring every owner-builder to purchase the same insurance. Owner-builder permits, compulsory insurance and statutory warranty requirements differ between states and territories.
Public liability and contract works insurance are important forms of protection to consider, but whether particular cover is legally required should be confirmed against the rules applying in the state or territory where the project is located.
Can I take out public liability insurance without contract works cover?
This depends on the insurer and product. Some owner-builder insurance products package public liability and contract works cover together because both relate to the same construction project. Availability of standalone cover should be confirmed with an insurer or insurance broker.
Does owner builder insurance cover defects or poor workmanship?
Do not assume it does. Contract works insurance primarily responds to insured loss or damage as defined by the policy. The cost of correcting defective workmanship itself may be excluded, while treatment of resulting damage varies between policies.
Statutory warranties and building insurance schemes are separate and differ between jurisdictions.
If I hire only licensed tradespeople, should I still consider my own insurance?
Yes. A contractor’s insurance should not be assumed to cover all of your exposures as an owner-builder. Consider the construction works, existing structures, your own potential legal liability and any other project-specific risks when arranging insurance.
What happens to my home insurance once construction starts?
It depends on your policy and the nature of the work. Major renovations and structural construction can affect existing home insurance.
Notify your home insurer before work starts and confirm what will remain covered during construction. Separate construction insurance may be required for the works.
How long does owner builder insurance need to stay in place?
Construction cover should reflect the expected duration of the project and the policy’s commencement and expiry provisions.
If construction is delayed beyond the insured period, contact your insurer or broker before the policy expires to determine whether the cover can be extended. Otherwise, the project may be left without the relevant construction insurance.
General information only. This information does not take into account your individual circumstances, project or financial situation. Insurance and owner-builder requirements vary between Australian states and territories. Review the relevant Product Disclosure Statement (PDS) and Financial Services Guide (FSG), along with current regulatory requirements, and consider obtaining advice appropriate to your circumstances.
References
- Building Commission NSW. “When an owner-builder permit is needed.” NSW Government, Building Commission NSW, 11 September 2025, https://www.nsw.gov.au/housing-and-construction/building-or-renovating-a-home/owner-builder/when-a-permit-needed. Accessed 07 September 2026.
- NSW Government. “Information for owner-builders.” NSW Government, NSW Government, https://www.sira.nsw.gov.au/home-building-compensation/home-building-compensation-for-homeowners/information-for-owner-builders. Accessed 07 September 2026.
- NSW Government. “Working as an owner-builder.” NSW Government, 11 09 2025, https://www.nsw.gov.au/housing-and-construction/building-or-renovating-a-home/owner-builder/working. Accessed 07 09 2026.
- “What is an Owner-builder?” Building and Plumbing Commission, Building and Plumbing Commission, https://www.bpc.vic.gov.au/owner-builders/what-is-an-owner-builder. Accessed 07 September 2026.
