Queensland cost-plus contracts are covered only for defective-work claims, while fixed-price residential contracts can be covered for both defective-work and non-completion claims; this is why the QBCC does not recommend cost-plus contracts. The gap comes from the uncertain final price: the scheme needs the amount agreed to finish the work to settle a non-completion claim, but a cost-plus contract has no certain final price. Under the QBCC’s home warranty guidance updated 11 May 2025 (figures checked 1 October 2026), insurance is compulsory for residential construction work valued at more than $3,300 including materials, labour and GST, and home warranty insurance pays up to a maximum of $200,000 on claims.
What do fixed-price and cost-plus contracts cover?
| Contract type | Non-completion claim | Defective-work claim | QBCC position |
|---|---|---|---|
| Fixed-price residential contract | Can be covered | Can be covered | The QBCC says to use fixed-price residential contracts |
| Cost-plus contract | Not covered | Only covered claim type | The QBCC does not recommend cost-plus contracts for residential work |
A non-completion claim applies when the contractor does not, or cannot, finish the contracted work. The QBCC says this claim can only be made under the Queensland Home Warranty Scheme when the homeowner has a fixed-price residential contract with a licensed contractor.
A defective-work claim applies when the contractor does not fix defects. This protection is available for both fixed-price and cost-plus residential contracts, subject to the scheme’s limitations and exclusions.
Why does an uncertain final price matter?
To settle a non-completion claim, the scheme needs to know how much the homeowner agreed to pay to finish the work. A cost-plus contract does not establish a certain final price, so the QBCC says it cannot determine whether the homeowner has suffered a quantifiable loss.
The uncertain price therefore affects the non-completion claim, not the availability of all home warranty protection. A cost-plus contract remains covered for defective-work claims.
The QBCC’s homeowner guide updated 24 January 2025 also says cost-plus contracts can be complex and often lead to misunderstandings about home warranty insurance. It strongly recommends avoiding them to protect homeowners and licensees.
What should the contract and quote show?
For residential construction work valued at more than $3,300, including materials, labour and GST:
- The contractor collects the home warranty insurance premium from the homeowner and pays it to the scheme.
- The premium is included in the homeowner’s contract.
- The premium is paid before work begins.
- Each quote should include the premium so the homeowner can compare the quotes accurately.
Contractors must arrange home warranty insurance through the scheme or face significant penalties. However, the QBCC material does not state one standard premium amount for every project.
Which building work is eligible?
Home warranty insurance applies only to residential construction work. It is not home and contents insurance and does not cover commercial building projects.
The scheme also excludes work in or for a multiple dwelling with more than three storeys, without counting a storey mainly used as a carpark. That work is not considered residential construction work and is not insurable under the scheme.
If it is unclear whether a project is insurable, check the QBCC’s detailed guide before signing.
How long does cover last?
The QBCC scheme page states that cover lasts for 6 years and 6 months from the earliest of:
- entering into the contract;
- paying the premium; or
- commencing the work.
If the residential construction work took more than six months to complete, cover can be extended by 6 months from the cover commencement day.
The QBCC’s homeowner guide gives more specific general periods by work type: structural-defect cover generally lasts for 6 years and 6 months from the contract date, while non-structural work typically has cover for around six months from completion. The QBCC says these are general timeframes and specific circumstances may vary.
Claims must be made within timeframes that depend on the type of claim, so do not rely on one deadline for every type of defect or incomplete work. Cover cannot be renewed after it expires.
What else can affect a claim?
Home warranty claims are subject to limitations and some exclusions. Payment to the contractor of more than is allowed by law or under the contract can affect the insurance.
The policy is attached to the property, so it remains in place if the home is sold. A buyer or the buyer’s legal agent can search for any home warranty insurance attached to the property. However, the insurance cannot be transferred between contractors.
After paying a claim, the scheme tries to recover the amount paid to finish or fix the work from the contractor.
What should homeowners check before signing?
Before accepting a residential building contract, homeowners should:
- Check whether the contract is fixed-price or cost-plus.
- Confirm that the required home warranty insurance premium is included in the quote and contract.
- Ask whether the planned work is residential construction work within the scheme.
- Review the claim timeframes, limitations and exclusions.
- Check the current QBCC regulator page and the applicable policy PDS.
This article provides general information, not financial or legal advice. Check the current regulator page and the policy PDS before signing a contract or making a claim.
Sources
- Queensland Building and Construction Commission — What is home warranty insurance
- Queensland Building and Construction Commission — Home warranty insurance: A guide for homeowners
FAQ
Does a Queensland cost-plus contract have any home warranty protection?
Yes. Cost-plus residential contracts are covered only for defective-work claims. They are not covered for non-completion claims.
Why can’t I make a non-completion claim under a cost-plus contract?
The scheme needs the agreed amount to finish the work to determine the loss. Because a cost-plus contract has no certain final price, the QBCC says it cannot quantify that loss.
Is a non-completion claim available under every fixed-price contract?
A non-completion claim under the scheme requires a fixed-price residential contract with a licensed contractor. It is also subject to the scheme’s other rules, limitations and exclusions.
Does home warranty insurance stay with the home after it is sold?
Yes. The policy is attached to the property and remains in place for its applicable period after sale. It cannot be transferred between contractors.
Partner links. Using them costs you nothing extra and may earn us a commission.