Yes. From 1 July 2027, the NSW Government says a registered building practitioner must be indemnified under an insurance policy for their work in addition to taking out Home Building Compensation (HBC) cover (page updated 6 July 2026). For an eligible NSW residential home or renovation project over $20,000 including GST, Service NSW says at least $340,000 in HBC cover must be held before work starts or any money, including a deposit, is taken (page updated 9 September 2024; figures checked 1 October 2026). PI insurance responds to the practitioner’s professional risk, while HBC is a last-resort homeowner safety net; neither replaces the other.
How do PI insurance and HBC cover differ?
PI insurance indemnifies a registered practitioner for professional work. The NSW Government states that registered design practitioners and professional engineers must have PI insurance under an individual, partnership or corporate policy. From 1 July 2027, registered building practitioners must also be indemnified under an insurance policy for the work they carry out, in addition to HBC coverage.
HBC cover protects homeowners in a different situation. Formerly called home warranty insurance, it helps if a builder cannot complete building work or fix defects because of insolvency, licence suspension, death or disappearance, or cannot honour warranty obligations.
| Question | PI insurance | HBC cover |
|---|---|---|
| What does it protect against? | Professional risk associated with the practitioner’s work | Certain losses to homeowners when a builder cannot complete work, fix defects or honour warranty obligations |
| Who must hold it? | Registered design practitioners and professional engineers; registered building practitioners from 1 July 2027 | A licensed builder or tradesperson for each residential project that meets the HBC requirements |
| What amount applies? | The policy must provide adequate cover for the practitioner’s work | At least $340,000 for an eligible project over $20,000 including GST |
| Where is it checked? | The policy and its product disclosure statement | The HBC certificate and the public HBC Check register |
The $340,000 requirement belongs to HBC cover. The regulator material cited here does not state $340,000 as the required PI policy limit.
Does HBC cover apply to every design service?
No. HBC is a project-based requirement, not a blanket obligation attached to every design service or every registered practitioner.
Service NSW says HBC generally applies when all of the following apply:
- the work is contracted with a homeowner, owner-builder or developer;
- the contract price, or the market cost of labour and materials, is over $20,000 including GST; and
- the project is not exempt from insurance.
Projects that typically require HBC include residential renovations of any height, houses, duplexes and triplexes, low-rise residential multi-unit buildings up to 3 storeys, and associated structures such as backyard swimming pools, spas, garages and outbuildings.
HBC is also not required when the work is subcontracted from another licensed contractor. That is an HBC exception; it does not remove any separate PI obligation that applies to a registered practitioner.
Use the regulator’s job-specific tool rather than assuming HBC applies merely because a designer or builder is involved.
What must happen before a deposit or work starts?
For an eligible job, the timing requirements are strict:
- Before contracting: HBC cover must be in place before contracting to work on certain residential building jobs.
- Before work or payment: hold at least $340,000 in HBC cover before starting the work or taking any money, including a deposit.
- For every eligible job: take out HBC cover for each job that meets the requirements.
- Before the deposit or work starts: provide the certificate of insurance to the homeowner.
- Legal consequence: failing to take out the required cover and provide the certificate is an offence under NSW law.
If a homeowner is contracting an individual or business for more than $20,000 of home building work, the NSW Government also advises checking that the business has valid insurance before paying any money, including a deposit, and before the work starts.
Which NSW tools can check the job and the cover?
Service NSW provides tools for two different checks:
| Tool | What it answers |
|---|---|
| HBC Assist | Does this particular job need HBC cover? |
| HBC Check | Is the residential job listed on the free public HBC Check register as having cover? |
Anyone can use HBC Check to confirm that a builder or tradesperson has valid cover for the residential work being performed in NSW.
An applicant seeking HBC cover needs a relevant building, trade or specialist contractor licence, an ABN or ACN, and a certificate of eligibility. The application is submitted through an insurance broker distributor from icare HBCF’s list.
How should a practitioner choose PI cover?
The NSW Government says practitioners should assess the adequacy of their PI insurance against their own circumstances. In particular, consider:
- their financial resources;
- risks associated with their work;
- the policy limits;
- other factors outlined in the Design and Building Practitioners Regulation 2021;
- whether the policy provides adequate cover to indemnify them for their work; and
- any need for independent advice about the amount and type of cover required.
Different practitioners have different business risks, so one policy structure or limit will not necessarily suit every practice. A practitioner may also need to show that they assessed the adequacy of their cover.
An HBC certificate does not establish that a PI policy is in place. Check the policy’s product disclosure statement, including its scope, limits, exclusions and claims conditions, and confirm the PI requirements on the regulator page before relying on this summary.
This is general information, not financial or legal advice. Because the PI requirement has a future start date and scheme details may change, check the regulator page and the relevant policy PDS before acting.
Sources
- Insurance cover for building work | NSW Government
- Apply for home building compensation cover | Service NSW
FAQ
Is $340,000 the minimum PI policy limit from 1 July 2027?
No. The $340,000 amount applies to HBC cover for an eligible residential project. The cited regulator material requires practitioners to assess whether their PI cover is adequate but does not identify $340,000 as the PI limit.
Does every designer need $340,000 in HBC cover?
No. HBC depends on the residential project, its value and whether it is exempt—not simply on whether a design service is provided. Use HBC Assist to assess the particular job.
Can HBC cover replace PI insurance?
No. HBC protects homeowners in specified circumstances. From 1 July 2027, a registered building practitioner must also be indemnified under an insurance policy for their work.
When must the HBC certificate be provided?
It must be provided to the homeowner before the contractor takes a deposit or starts work on an eligible job.
How can I check whether a job has HBC cover?
Use the free public HBC Check register. Anyone can use it to confirm valid HBC cover for the residential work being performed in NSW.