What happens when a home builder becomes insolvent in Australia?

When a residential builder becomes insolvent mid-build, the amount a homeowner may recover depends on the state or territory, the contract date, the certificate and the way the builder failed. Australia has no national home warranty scheme, and cover rules and payout limits differ across jurisdictions.

In 2025-26, 712 residential building companies entered external administration or had a controller appointed for the first time, according to ASIC.

Each of the eight selected scheme limits or statutory minimums is below the corresponding ABS 2024-25 average new-house cost for its state or territory. Their illustrative limit-to-cost ratios range from 31.0% in the ACT to 82.4% under Victoria's new scheme, with a median of 48.3%. In Queensland, non-completion accounted for 58.1% of the $284.4 million in home warranty claims approved over the five years to 2024-25.

SECTION 01 · FIRST RESPONSE

What happens first when a builder becomes insolvent mid-build?

In 2025-26, 712 residential building companies entered external administration or had a controller appointed for the first time, down 13.1% on the 819 recorded in 2024-25.

However, an external administration or controller appointment does not necessarily mean that a builder is insolvent or that work will stop. A company under voluntary administration hands control to an administrator, who reports back to creditors on the options, including the option to continue trading.

Most home warranty schemes only respond to a defined event. A builder entering administration therefore does not, by itself, establish that a homeowner is eligible to make a claim.

Five matters commonly addressed before a home warranty claim

Official guidance in Victoria, Queensland and New South Wales identifies five common checks that may occur before a claim is lodged.

• Site records and project documents: schemes can require mitigation and evidence, and site-security cover can carry its own deadline.
• The builder's legal entity and status: the contract name, ABN and ACN are matched against ASIC or AFSA records, and the administrator or liquidator is contacted.
• Contract termination requirements: Queensland generally requires a validly terminated fixed-price contract for a non-completion claim, while other schemes respond to specified insolvency, deregistration or licence events instead.
• The certificate or policy: thresholds, building types, storey limits, contract dates and provider arrangements all differ.
• Notification requirements and deadlines: New South Wales guidance requires notification even before a claim trigger occurs.

How often residential builders enter external administration

The 2025-26 count was the first annual decline in the five years covered by the ASIC series. Before this decline, the number of residential building companies entering external administration or having a controller appointed rose 156.7% from 319 in 2021-22 to 819 in 2024-25.

Not all of those appointments represent confirmed insolvencies. ASIC's Series 1 counts the first time a company enters external administration or has a controller appointed, which the regulator uses as a proxy for corporate insolvency rather than a count of it. The liquidation category includes 23 provisional-liquidator appointments in 2025-26.

The composition moved as much as the total did. Administrations and restructurings peaked at 232 in 2024-25 and more than halved the following year, while receiver and controller appointments have risen in each year since 2022-23, reaching 117. Across the five years, the liquidation category accounted for 2,069 of 3,129 appointments, or 66.1%.

New South Wales accounted for 322 of the 712 appointments in 2025-26, ahead of Victoria on 217 and Queensland on 114, measured by principal place of business.

SECTION 02 · CHECKING COVER

How home warranty cover is confirmed in each state and territory

Contract-value thresholds for mandatory cover span almost an eightfold range across Australia, from $3,300 in Queensland to $25,000 in the Northern Territory. Each state and territory operates its own regime. Because Victoria has separate arrangements based on the contract date, the comparison contains nine entries.

Contracts signed in Victoria on or after 1 July 2026 fall under the new first-resort Home Warranty scheme, and earlier contracts remain on last-resort Domestic Building Insurance. Each scheme issues a certificate, notice of cover or approved-provider record, and each provides its own search route:

• Queensland uses a property insurance search against premiums received by the Queensland Building and Construction Commission (QBCC).
• Victoria uses the Notice of Cover or a policy search through the Building and Plumbing Commission.
• New South Wales uses the HBC certificate and HBC Check.
• Western Australia uses records held by the certificate issuer, insurer or permit authority.

Queensland's $3,300 threshold applies to work that would fall well below the requirement everywhere else, including many single-trade renovations. At the other end, the Northern Territory's $25,000 threshold leaves a band of mid-sized jobs outside mandatory cover that would attract it in five other jurisdictions.

Victoria's two cohorts differ by $4,000, so contracts signed days apart in mid-2026 can sit on either side of the threshold and fall under different claim models. The ACT works differently again: rather than a value threshold, its rules require evidence of cover before the commencement notice, and apply to houses and apartments up to three storeys.

SECTION 03 · CLAIMS PROCESS

How do home warranty claims work in Australia?

Lodgement windows run from 90 days to 12 months, but the deadlines apply to different claim types and begin from different events.

Queensland generally requires a contract to have been validly terminated because of the builder's default before a non-completion claim can proceed. Several schemes respond instead to a listed insolvency, deregistration or licence event, and Victoria's new scheme can respond where a builder is unable or unwilling to complete, without waiting for insolvency.

The seven common stages in a home warranty claim

The claims process can be organised into seven common stages, although the legal requirements and their order differ by jurisdiction. Most of the differences occur in the stages before a claim is lodged.

Source: ASIC, Wind up an insolvent company; SIRA NSW; Consumer Affairs Victoria, 5 February 2026; BPC Victoria, 30 June 2026; QBCC Product Disclosure, July 2025; Northern Territory Government, 30 March 2026. This is an editorial synthesis of official claim guidance, not a single statutory sequence.

Home warranty claim lodgement deadlines by jurisdiction

The published deadlines are not directly comparable because they apply to different claim types and begin from different events. The shortest named window is 90 days, which applies to Northern Territory defective-work claims. For Northern Territory certificates issued from 30 March 2026, a defective-work claim must be made within the cover period, so the 90-day deadline does not apply to a mid-build non-completion claim.

Source: Building (RBI and Fidelity Fund Schemes) Regulations 2012 (NT), in force 30 March 2026, reg 40; ACT EPSDD; Consumer Affairs Victoria, 5 February 2026; QBCC Product Disclosure, July 2025; SIRA NSW; BPC Victoria, 30 June 2026; Building and Energy WA, October 2025; SAFA; CBOS Tasmania. "Policy-specific" means no window was published, not that no deadline applies.

The longest published window in the table is 12 months, against 90 days for the shortest specified claim type. This does not mean one scheme always provides four times as long to lodge a claim, because the deadlines cover different losses and begin from different events.

Victoria's new scheme adds a step the others do not share in the same form. Where the builder is still trading, a written complaint and a 28-day builder response period generally apply before a claim proceeds, though this may not be required after some insurable events.

SECTION 04 · SCOPE OF COVER

What home warranty insurance covers for incomplete and defective work

Every insurance-based scheme separates the cost of completing an unfinished home and the cost of repairing defective work after completion. Non-completion cover is often subject to a separate limit and may provide a smaller entitlement than defect cover. Where a scheme sets it as a share of the contract price, that share is 20% or 30%.

Victoria's Home Warranty limits incomplete work to 30% of the contract price including variations, inside its $400,000 total, and older Victorian DBI policies may be limited to 20%. Northern Territory regulations take the opposite approach and set a floor: an authorised policy must provide non-completion cover of at least 20% of the total contract price.

• Queensland pays the actual cost to complete, less the unpaid balance of the original contract, with reductions available in defined circumstances.
• Western Australia pays up to the completion cost or the contract value, whichever is lower.
• South Australia contributes to completion costs above the original contract price, subject to the policy limit.

Source: BPC Victoria, 30 June 2026; Consumer Affairs Victoria, 5 February 2026; NT Regulations, regs 17 and 48; CBOS Tasmania; Building and Energy WA, October 2025; SIRA NSW; QBCC Product Disclosure, July 2025; SAFA. Tasmania does not publish a defect period.

Living costs and site-protection payments can be included within the main scheme limit rather than provided in addition to it. Victoria allows up to $12,000 for accommodation and $5,000 for site security, both counting toward the $400,000 total. Queensland's $200,000 category maximum includes up to $5,000 for alternative accommodation, removal and storage.

Queensland home warranty claims by cause

Queensland approved $284.4 million in home warranty claims across the five years to 2024-25. Non-completion accounted for 58.1% of the approved value, more than defective work and subsidence combined. No comparable multi-year breakdown was located for another scheme in the official sources reviewed.

Source: QBCC Annual Report 2024-25, page 22, Table 21. Amounts approved, not cash paid, and not adjusted for inflation. In 2021-22 the three causes add to $36.0m against a published $35.1m, so five-year shares carry about 0.3 percentage points of uncertainty.

Movement in non-completion accounts for almost all of the shape of the series. Defective work and subsidence together moved within a range of $8.2 million across the whole period, while non-completion moved through a range of $53.0 million.

Claims received peaked at 2,745 in 2022-23, one year before approved value peaked, and stood at 1,964 in 2024-25. This sequence is consistent with, but does not prove, a lag between claim lodgement and approval.

SECTION 05 · LIMITS AND COSTS

Home warranty payout limits compared with new-house costs

Five of the eight current regimes set their headline figure at $200,000, and each of the eight selected limits is below the average cost of a new house in its own state or territory.

However, the figures do not represent the same type of cover. New South Wales, Victoria and Western Australia publish a total policy cap or limit, while Queensland publishes a maximum for each category of loss. The ACT and the Northern Territory publish a statutory minimum a policy must meet, not a ceiling, and Tasmania publishes a maximum assistance amount under a package that is not insurance.

Source: SIRA NSW; BPC Victoria, 30 June 2026; QBCC Product Disclosure, July 2025; Building and Energy WA, October 2025; SAFA; CBOS Tasmania; ACT EPSDD; NT Regulations, regs 17 and 48; ABS Building Activity, Australia, released 8 April 2026, Table 1. Illustrative median across the eight selected limits: 48.3%.

Each selected figure is below its jurisdiction's average build cost, from 31.0% in the ACT to 82.4% in Victoria. Five of the eight figures are $200,000, so differences between those five ratios reflect differences in build costs rather than in scheme generosity.

Most of the increase occurred during the final three years of the series. Measured against that average, $200,000 covered 74.5% of a national-average build in 2010-11 and 42.1% in 2024-25. Both figures are illustrative, since $200,000 was not the limit in force in the earlier year.

Source: QBCC Annual Report 2024-25, page 22, Table 21.

SECTION 06 · TIMEFRAMES

Home warranty claim deadlines and resolution times

The best available evidence shows that 14 of 21 sampled liability decisions in New South Wales were made within 90 days, from a 30-claim audit with fieldwork in September 2022. No comparable measure of the total time from claim lodgement to a finished house was located in the official sources reviewed.

• The lodgement deadline, which ranges from 90 days to 12 months depending on the scheme, claim type and starting event.
• The time taken to reach a liability decision, which determines whether the claim is accepted.
• The total time required to repair or complete the project, which may include scoping, expert assessment, tendering and construction after the liability decision.

The audit sample is small, relates to one scheme and measures liability decisions rather than end-to-end claim resolution. Claim volumes do not fill the gap either: Queensland received 2,745 claims in 2022-23 and 1,964 in 2024-25, but a count of claims received says nothing about how long any of them took.

SECTION 07 · GAPS IN COVER

What home warranty insurance does not cover

The largest potential gap arises where the cost to complete exceeds the policy limit. The balance falls on the homeowner, and the illustrative median of the eight limit-to-build-cost ratios is 48.3%. That median is drawn from mixed measures and does not itself quantify any homeowner's exposure.

Source: QBCC Product Disclosure, July 2025; NT Regulations, regs 15, 18, 46 and 49; Building and Energy WA, October 2025; Consumer Affairs Victoria, 5 February 2026; BPC Victoria, 30 June 2026; SIRA NSW; ACT EPSDD. Victoria's test combines two conditions: more than three storeys and more than two homes.

Queensland's exclusion of cost-plus and construction-management contracts from non-completion cover turns on the contract type chosen at signing, though defect cover may still apply to the same work. Northern Territory regulations set out what an authorised policy is permitted to exclude, including payments above the contract price, wear and poor maintenance, loss of income, inconvenience and delay damages.

Recoveries from insolvent or defaulting builders

Recovered paid-out costs reached $18.5 million across the five years to 2024-25, including $4.3 million in 2024-25, against $284.4 million in claims approved over the same period. The two figures should not be treated as a recovery rate: recoveries can relate to claims approved in earlier years, and approved amounts are not the same as cash paid.

What published home warranty data does not answer

Source: ASIC Insolvency Statistics, Series 1 and Information Sheet 80; QBCC Annual Report 2024-25; BPC Victoria; CBOS Tasmania.

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