Upcoming Changes to Building Indemnity Insurance Explained
Posted on September 26, 2025
Presently, builders are required to take out a policy of building indemnity insurance if the building work requires development approval and costs $12,000 or more. From 1 October 2025, the requirement for building indemnity insurance is set to change.
What is building indemnity insurance?
Building indemnity insurance is designed to safeguard homeowners by providing coverage for claims related to incomplete or defective work where the builder goes broke, missing, or dies.
Building indemnity insurance is a last resort scheme, meaning it does not cover delays in construction or disputes between the homeowner and the builder. These types of issues fall outside the scope of the policy. If you need advice about a claim or your rights, we can help – get in touch with us to discuss your options.
What’s new?
From 1 October 2025, the policy limit for new building indemnity insurance policies issued by QBE will increase to $250,000 (currently, it is $150,000). This higher limit will only apply to new policies issued by QBE on or after that date. Policies issued prior to 1 October 2025 will retain their existing $150,000 limit.
From 10 November 2025, the $250,000 policy limit will be prescribed in the Building Work Contractors Regulation and will apply to all new policies issued in South Australia, regardless of the insurer.
From 10 November 2025, the definition of “minor domestic building work” will increase from $12,000 to $20,000. The change means that a builder will only be required to take out a policy of building indemnity insurance if the value of the building work is more than $20,000 and the building work requires development approval.
Consequences of not providing a certificate of building indemnity insurance
It is essential that a builder provides the homeowner with a copy of the certificate of building indemnity insurance before any building work begins. Commencing building work without first supplying this certificate is a breach of the Building Work Contractors Act 1995 (SA) – a maximum penalty of $20,000 applies for non-compliance.
Further, a failure to comply with this requirement means that the prescribed time to “cool off” from the building contract is extended all the way to the completion of the building work.
Conclusion
With significant changes to building indemnity insurance requirements taking effect from 1 October 2025 and 10 November 2025, it is important for both builders and homeowners to stay informed and prepared. The increased policy limits and revised threshold for “minor domestic building work” will impact when insurance is required and the level of protection available.
Builders must continue to comply with their legal obligations, including providing the certificate of insurance before any work begins to avoid penalties.
If you’re unsure about how these changes might affect you, or if you’re dealing with issues not covered by building indemnity insurance, we’re here to help. Get in touch with our Construction team to discuss your situation.
