Home warranty insurance: what builders need to understand
Domestic building insurance protects owners — and getting it right is often a condition of doing the work.
What it covers
Home warranty insurance — known by different names across states (such as domestic building insurance) — provides cover to homeowners if a builder can't complete or rectify work due to insolvency, death or disappearance. For many residential jobs above a threshold, it's a legal prerequisite.
Eligibility is about you
Insurers assess a builder's eligibility and set limits based on experience, financial position and track record. Growing builders sometimes hit eligibility ceilings, which can constrain how much work they can take on at once.
Get the timing right
In many states you must have the cover in place — and give the certificate to the owner — before taking a deposit or starting work. Missing this step can carry penalties and complicate payment.
Plan around your limits
Because eligibility affects capacity, treat your insurance limits as a business-planning input, not an afterthought.
