The State Insurance Regulatory Authority (SIRA) says in guidance updated 9 July 2026 that the principal contractor must take out home building compensation (HBC) insurance when residential building work costs over $20,000 inclusive of GST (figures checked 1 October 2026). Employees and subcontractors generally do not take out HBC cover for that work, and insurance they hold does not cover the principal contractor or satisfy its obligation. Subcontracting the work does not transfer that obligation to the people carrying it out.
Does every NSW landscaping job require HBC cover?
Start with the nature of the work, not simply the fact that it is landscaping. SIRA’s threshold applies to residential building work, including trade or specialist work involved in constructing, altering or renovating a dwelling.
The threshold works as follows:
| Project arrangement | SIRA’s position |
|---|---|
| The work is under contract and its price is known | The principal contractor must insure the work if the price is over $20,000 inclusive of GST. |
| The price is unknown, or the work is not under contract | Insurance is required if the reasonable market cost of the labour and materials involved will exceed $20,000 inclusive of GST. |
| The project is covered by more than one contract | The amount is the total of all the contracts. |
| The project falls within an automatic exemption | Certain project types, including construction of some multi-storey buildings, are automatically exempt. |
A landscaping contractor should therefore confirm both what the work involves and who is contracting for it before deciding whether HBC cover is required.
When is the landscaping contractor the principal contractor?
A person is generally a principal contractor if they are contracting with:
- a homeowner;
- a developer;
- an owner-builder permit holder, for residential building work covered by the permit; or
- for work on land they own, where they are a licensed contractor and are not acting under an owner-builder permit.
For qualifying residential building work, a landscaping business contracting directly with the homeowner will generally be acting as the principal contractor.
Only the principal contractor can satisfy insurance obligations under the Home Building Act 1989. A homeowner, developer or owner-builder does not need to take out insurance under the scheme, but that does not remove the obligation from a contractor who is acting as the principal contractor.
Do employees and subcontractors need separate HBC cover?
Generally, no. Employees and subcontractors are exempt from insurance under section 98 of the Home Building Act 1989. SIRA specifically notes that an employee employed by a licensed contractor and a subcontractor working for a licensed contractor generally do not need to take out insurance.
More broadly, someone carrying out work for a person who must take out home building insurance does not need separate insurance under the scheme for that work.
Their subcontract value does not transfer the principal contractor’s responsibility to them. The person who contracted for the project remains responsible for its insurance obligation.
Can a subcontractor’s policy satisfy the principal contractor’s obligation?
No. SIRA states that a principal contractor cannot satisfy its insurance obligations by asking employees, subcontractors or other people performing the work to take out insurance. Insurance taken out by an employee or subcontractor does not cover the principal contractor.
The principal contractor must take out the insurance itself in the same name used to contract the work. If the contract is made in a corporation’s name, the insurance must also be taken out in that corporation’s name.
When must the principal contractor have HBC cover?
When the obligation applies, cover must be taken out before the principal contractor:
- requests or accepts any money, including a deposit; or
- starts any residential building work under the contract.
Insurance may be bought from insurers or providers licensed by the State Insurance Regulatory Authority. The principal contractor should confirm that the policy is in the correct contracting name and has commenced before money is requested or accepted and before work begins.
How can a homeowner or contractor check the insurance?
A homeowner, purchaser or other interested party can use SIRA’s public register to check whether the principal contractor has taken out insurance.
SIRA also makes a list of approved licence holders available on its website. A contractor arranging cover should check that the insurer or provider is appropriately licensed, while a homeowner checking an existing project should verify the principal contractor’s insurance status.
A homeowner or purchaser of a new or renovated home should confirm that the work was insured. If it was not insured, they may be unable to claim on the insurance scheme.
What can happen if the principal contractor does not insure the work?
SIRA identifies several possible consequences:
| Matter | Possible position described by SIRA |
|---|---|
| Principal contractor fails to insure | Maximum penalties of $110,000 for a corporation and $22,000 in any other case. |
| Conviction for a second or subsequent offence | A penalty of up to $55,000, imprisonment for a term not exceeding 12 months, or both. |
| Contract and customer money | The principal contractor’s ability to enforce the contract or recover money from the customer may be affected. |
| Planning and project requirements | The project’s compliance with some planning-law requirements, commencement or certification may be affected. |
This is general information, not financial or legal advice. Check SIRA’s current regulator page and the relevant policy’s PDS before relying on the requirements or taking action.
Sources
FAQ
Do employees and subcontractors need their own HBC policy?
No. When they are carrying out work for a principal contractor that must hold scheme insurance, employees and subcontractors generally do not need separate HBC cover for that work.
Can I ask every subcontractor to carry HBC insurance instead?
No. Insurance taken out by a subcontractor does not cover the principal contractor and cannot satisfy the principal contractor’s obligation. The principal contractor must arrange its own cover in the name used to contract the work.
Does the $20,000 threshold apply separately to each subcontract?
No. If a project is carried out under more than one contract, SIRA says the amount is the total of all the contracts. If that project amount is over $20,000 inclusive of GST, the principal contractor must hold the required cover.
When must the principal contractor take out insurance?
Before requesting or accepting any money, including a deposit, or doing any residential building work under the contract.
How can I check whether the principal contractor is insured?
Use SIRA’s public register to check whether the principal contractor has taken out insurance. Uninsured work may leave a current or future homeowner unable to claim on the scheme.
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