To begin the process of a non-completion of building work home warranty claim you must:
If your claim is successful the insurance will pay for the loss you suffer as a result of the contractor's failure to complete the work, which may include things like:
- getting your deposit back if work has not started
- getting another licenced contractor to finish the work
- alternative accommodation in some circumstances
- repairing damage that has occurred because the work was not finished.
Types of non-completion claim
The type of non-completion claim depends on whether works have started or not.
This is where you enter a contract with a licensed contractor and pay them a deposit for the work.
Work has not started and the contract comes to an end, e.g. they go bankrupt or die, or you validly terminate the contract with the licensed contractor based on their default.
Your loss is the amount of money you paid to the licensed contractor. If we accept your claim we will refund you the deposit you paid under your contract, or the maximum deposit payable by law, whichever is less.
See a worked example of our assessment of a non-completion claim before the work has started.
This is where you enter a contract with a licensed contractor who starts work on-site, but the contract ends before the work is completed; e.g. they go bankrupt or die, or you validly terminate the contract with the licensed contractor based on their default.
In general, your loss is the extra amount on top of your original contract price that you'd need to pay a new contractor to complete the work.
This means we will pay the difference between the funds you still hold, or should still hold under your contract, and the amount we decide it will cost to complete the work with another licensed contractor.
See a worked example of our assessment of a non-completion claim after the work has started.
Eligibility criteria for a claim
Conditions
We will assess your claim to make sure:
- the contract was a fixed-price contract
- the contract with the licensed contractor has ended in one of these ways:
- you have validly terminated the contract with the licensed contractor based on their default
- the licensed contractor has died
- the licensed contractor was a company and no longer exists (e.g. the company is deregistered)
- the licensed contractor is insolvent and their licence has been cancelled by the QBCC.
Time limits for claims and cover
You must claim within a fixed time limit.
Where no work has begun:
- the contract must end within 2 years from the contract date
- a claim must be lodged with the QBCC within 3 months from the date the contract ends.
Where work has begun:
- the contract must end within 2 years from the date works start
- a claim must be lodged with the QBCC within 3 months from the date the contract ends.
What we will pay
If no work has started, we will refund the home owner the deposit you paid under your contract, or the maximum deposit payable by law, whichever is less.
If works have begun (i.e. physically started on site) we will pay the difference between the funds the home owner still holds or should still hold under the contract and the actual cost to complete the work.
We work out the cost to complete the work by asking for quotes from an outsourced panel of licensed contractors.
We will then approve a licensed contractor, who you then can contract to do the work.
Accommodation expenses
If your work has started and we approve a claim for non-completion, you may also claim for accommodation expenses, with some conditions:
- the maximum you can claim is $5,000, unless you have optional additional cover, which increases this amount to $10,000
- in general, this means reasonable alternative accommodation expenses until the work is completed, starting from (whichever is later out of when):
- you lodged your claim
- your contract ends
- your original contract specified the project would reach practical completion
- you must claim for accommodation expenses within 28 days of your home being liveable.
Cover for damage while we assess your claim
In some cases we can also provide cover if the incomplete work is damaged by fire, storm, vandalism or theft, as long as:
- you had already lodged your non-completion claim before the damage occurred
- we have accepted your non-completion claim
- the damage happens to work that is incomplete
- the claim for fire, storm, vandalism or theft is made within 14 days of the damage occuring
- you report vandalism or theft to the police.
Maximum cover for damage
Payments for vandalism and theft:
- are part of the $200,000 maximum paid for non-completion
- have an excess of $2,500 for each incident.
We will pay a maximum of $200,000 for damage from fire or storm.
Limits on payments
We can pay you less if:
- you pay more than the maximum deposit required by law (i.e. we can only pay you for the deposit that the licensed contractor was lawfully allowed to charge)
- you pay for work ahead of schedule under your contract (i.e. we can only pay you for what you would have lost if you had followed the schedule)
- your contract price is underpriced/underquoted by more than 30%. If the value of the work exceeds the contract price by more than 30% (e.g. if the contract price is $200,000 but the actual value of the work is $270,000, the claim approval will be reduced by $70,000)
- assistance for the cost of certificates for the building work carried out by the original contractor before the termination of the contract is expressly excluded from the QHWS terms of cover. See Building approval associated with non-completion advice for Consumers.
Read more about the maximum entitlements for different scenarios.
Who is not eligible to claim for non-completion
You cannot make a non-completion claim if you are a:
- developer
- person building 3 or more residences, whether they are standalone houses or residential units
- a licensed contractor building on land that they own
- a consumer claiming for non-completion of a construction management contract.
You sign a fixed-price contract with a licensed contractor on 10 January 2020 to construct a residence for $400,000.
You pay the licensed contractor a deposit of $20,000. However, before any work is started, the licensed contractor goes bankrupt in March 2020.
You validly terminate the contract on 1 April 2020 and lodge a home warranty insurance claim with the QBCC on 10 April 2020.
| What we check | Outcome |
|---|---|
| Is there a fixed-price contract? | Yes |
| How much was the contract worth? | $400,000 |
| Has the deposit been paid? | Yes |
| How much was the deposit worth? (We can only refund up to the maximum deposit payable by law.) | $20,000 |
| Has the contract ended? | Yes |
| Has any work started? | No |
| Has the contract been terminated within 2 years from when the contract was entered into (when it was signed or agreed to). | Yes |
| Has the claim been lodged within 3 months from the date the contract ends? | Yes |
| Do we accept or decline claim? | Accept claim |
| Total payout amount | $20,000 |
We will pay you $20,000 (the deposit you paid to the licensed contractor).
This will put you back in the position you were in before signing the contract. You can now enter into a new contract with a new licensed contractor to build your home.
You sign a contract with a licensed contractor on 10 January 2020 to build a home valued at $400,000. The contractor completes the frame stage.
Under your contract you must pay the licensed contractor a total of $100,000 when the frame stage is completed. You have paid the licensed contractor $100,000.
However, the licensed contractor then goes bankrupt. You validly terminate the contract on 1 August 2020 and lodge a claim with the QBCC on 10 August 2020.
| Claim details | Assessment |
|---|---|
| Is there a fixed price contract? | Yes |
| How much was the contract worth? | $400,000 |
| How much did you pay the licensed contractor? | $100,000 |
| What is your remaining liability amount – money you still hold to pay the remainder of the contract ($400,000 – $100,000)? | $300,000 |
| Has the contract ended? | Yes |
| Has the contract been terminated within 2 years from the date the works started? | Yes |
| Has the claim been lodged within 3 months from the date the contract ends? | Yes |
| Accept or decline claim? | Accept claim |
| What is the QBCC quote to complete the work? | $375,000 |
| Calculation of approval amount (i.e. quote - remaining liability) NB THESE DASHES ARE MINUS SYMBOLS | $375,000 - $300,000 |
| Total approval amount. | $75,000 |
As work under your contract has started, we will ask for quotes from our panel of licensed contractors to work out how much it will cost to complete the work. The recommended quote is $375,000.
From this amount we deduct the amount you still hold from your original contract ($300,000) and we will pay $75,000 towards the cost of completing the work. This ensures that you get the house you contracted for, at the price you contracted for.
You sign a contract with a licensed contractor on 10 January 2020 to build a home valued at $400,000. The contractor completes the frame stage.
Under your contract you must pay the licensed contractor a total of $100,000 when the frame stage is completed. You have paid the licensed contractor $100,000.
The contractor then begins the enclosed stage, and you pay the contractor the full enclosed stage payment ($90,000). However, before finishing this stage the contractor goes bankrupt.
You validly terminate the contract on 1 August 2020 and lodge a claim with the QBCC on 10 August 2020.
| Claim details | Assessment |
|---|---|
| Is there a fixed-price contract? | Yes |
| How much was the contract worth? | $400,000 |
| How much is due under the contract (for the completed frame stage)? | $100,000 |
| What is the total amount paid by the consumer (includes $90,000 prepayment for enclosed stage)? | $190,000 |
| What is your remaining liability amount – money you still hold to pay the remainder of the contract ($400,000 - $190,000)? | $210,000 |
| What is our quote to complete the enclosed stage (which the owner paid for before it was due i.e. the owner should have still been holding this money)? | $80,000 |
| Has the contract been terminated within 2 years from the date the contract was entered into (when it was signed or agreed to)? | Yes |
| Has the claim been lodged within 3 months from the date the contract ends? | Yes |
| Accept or decline claim? | Accept claim |
| What is the QBCC quote to complete the work? | $375,000 |
| Calculation of approval amount (i.e. quote - remaining liability - prepayment). NB THESE DASHES ARE MINUS SYMBOLS | $375,000 - $210,000 -$80,000 |
| Total approval amount. | $85,000 |
Because you have paid for the enclosed stage, despite work only just starting on it, the amount we will pay you for your claim is reduced by how much it will cost to complete this stage. This is because you should still be holding this money and shouldn't have paid it to the contractor until they completed the enclosed stage.
You sign a contract with a licensed contractor on 10 January 2020 to build a home valued at $600,000. The contractor completes the frame stage.
Under your contract you must pay the licensed contractor a total of $100,000 when the frame stage is completed. You have paid the licensed contractor $100,000.
However, the licensed contractor then goes bankrupt. You validly terminate the contract on 1 August 2020 and lodge a claim with the QBCC on 10 August 2020.
We determine that the actual value of the work under your contract is $795,000.
| Claim details | Assessment |
|---|---|
| Is there a fixed price contract? | Yes |
| How much was the contract worth? | $600,000 |
| How much was paid under contract (for the completed frame stage)? | $100,000 |
| Your remaining liability amount – money you still hold to pay the remainder of the contract ($600,000 - $100,000). | $500,000 |
| Accept or decline claim? | Accept claim |
| How much has the QBCC assessed the work is worth? | $795,000 |
| Difference between value and contract price ($795,000 - $600,000) | $195,000 |
| Difference as a % of the contract price ($195,000/$600,000) x 100 | 32.5% |
| Value exceeds contract price by more than 30% | Under-pricing provision applies |
| Under-pricing amount is $795,000 - $600,000 | $195,000 |
| QBCC quote to complete work | $750,000 |
| Calculation of approval amount (i.e. our quote - liability amount - under-pricing amount) | $750,000 - $500,000 - $195,000 |
| Total approval amount | $55,000 |
Because the true value of the work exceeds your contract price by more than 30%, we will reduce your approval by the difference between your contract and our assessment of the project value ($195,000).
The Queensland Home Warranty Scheme does not provide cover for projects that could never reasonably be completed for their contract price.
Lodge a non-completion complaint
Begin the process for a claim against home warranty insurance.
