Three policies sit on a second home while it is being built, and none of them is the home warranty scheme doing everything. Home warranty insurance, which a licensed builder must take out on work over $3,300, covers the builder failing: not finishing a fixed-price job, not fixing defects, subsidence. It pays for storm, fire, vandalism or theft to unfinished work only after a non-completion claim is accepted, so it is not the policy that covers a module in a flood during the build. That is the builder's contract works insurance, which the QBCC says covers the site and materials against theft, vandalism, fire and storm until handover, with public liability beside it for anyone hurt on the site; most contracts require both and a lender asks to see them before releasing money. An owner builder has neither unless they buy them, and lenders that fund owner builders require it. The house's own policy needs to be told, because a building site in the yard and a new structure on the lot are both changes the insurer wants to know about.
The three policies
| Policy | What it covers | Who holds it | Required by |
|---|---|---|---|
| Home warranty insurance (Queensland Home Warranty Scheme) | Non-completion of a fixed-price contract on the builder's default, defects the builder does not fix, subsidence; storm, fire, vandalism and theft to unfinished work only once a non-completion claim is accepted | The licensed builder, premium collected from the owner | Law, on residential work over $3,300 by a licensed contractor |
| Contract works (construction, builder's risk) | Damage to the works during the build: storm, fire, theft, a module dropped or flooded on site | The builder, or the owner builder | Most building contracts, the QBCC says, and lenders before the first payment |
| Public liability | Injury or damage to third parties from the site | The builder, or the owner builder | Most building contracts; the QBCC notes the contract can also require the owner to hold it. Westpac asks for the builder's certificate before the first payment |
What the home warranty scheme is not
It is not storm cover, not contents cover and not a product warranty. The QBCC's product disclosure lists what it excludes: wear and tear, flood, landslip, earthquake, erosion, accidental damage, defective products and design by someone not suitably qualified. On a modular home the factory build is not insurable work on its own; cover follows the licensed installer's contract, and the delivered home is treated as a material. A module that arrives damaged is a question for the maker's contract and the transporter's insurance, not the scheme. What the warranty covers sets out the layers.
The owner builder's position
An owner builder cannot get home warranty cover and is the head contractor on the site, so the safety of the site, the trades and anyone who walks onto it is theirs. The QBCC's list of owner builder responsibilities includes the site and the safety; a construction risk policy in the owner's name is the way to carry it, and Westpac names owner builder construction risk insurance as a condition of lending. Licensed trades on the job carry their own liability for their own work.
The house's own policy
Moneysmart warns that an insurer can refuse a claim if the policyholder did not tell them something they should have, and that a granny flat under a home policy may not be covered once it is rented. The same logic runs the other way during the build: a crane in the yard, open trenches, a structure the policy has never heard of. Ring the insurer before the footings, tell them what is being built and by whom, and ask three things: whether the existing policy covers the house during the works, whether the new home is covered from the day it lands or only from completion, and what changes when a tenant moves in. Get the answer in writing and keep it with the Notice of Cover from the QBCC.
Before the first payment
- The QBCC Notice of Cover for the job, which a licensed builder gets once the premium is paid.
- The builder's contract works and public liability certificates, current, naming the site.
- For an owner builder: the construction risk policy and liability cover in the owner's name.
- The home insurer's written answer on the house during the build and the new home after it.
See it for your block
- Install cost calculator: licensed or owner builder
- What the warranty covers
- QBCC home warranty insurance, explained
Questions people ask next
Does home warranty insurance cover storm damage during a granny flat build?
Only in one case: damage to unfinished work after a non-completion claim has been accepted. Day-to-day storm, fire and theft cover during the build is the builder's contract works insurance, which lenders ask to see before releasing money.
What insurance does an owner builder need?
Owner builders cannot get home warranty cover. Lenders that fund them require owner builder construction risk insurance, and public liability covers anyone hurt on the site. Licensed trades carry their own cover for their own work.
Do I need to tell my home insurer about a granny flat?
Yes, before the build and again before a tenant moves in. Moneysmart warns an insurer can refuse a claim over something the policyholder should have disclosed, and a granny flat under a home policy may not be covered once rented.
- QBCC, Queensland Home Warranty Scheme product disclosure (what is covered and excluded), read October 2026
- QBCC, what is the Queensland Home Warranty Scheme, read 16 October 2026
- QBCC, insurance responsibilities when building or renovating, read 16 October 2026
- QBCC, responsibilities of an owner builder, read October 2026
- Westpac, guide to residential construction loans (public liability before first payment, owner builder construction risk insurance), read 16 October 2026
- Moneysmart (ASIC), choosing home insurance, read October 2026
- QBCC, A to Z guide of insurable building work (prefabricated homes), read October 2026