A Queensland cost-plus contract does not have non-completion cover under the Queensland Home Warranty Scheme, even when the residential work is valued at more than $3,300. The Queensland Building and Construction Commission (QBCC), on a page dated 11 May 2025, says insurance is compulsory at that threshold, but cost-plus contracts are covered only for defective-work claims; non-completion cover requires a fixed-price residential contract with a licensed contractor. Fixed-price contracts can support both types of claim, while the uncertain final price under a cost-plus contract prevents the Scheme from quantifying a non-completion loss.
Figures checked 1 October 2026.
What does the project-value threshold actually require?
The Queensland Government administers the Scheme through the QBCC. The threshold determines whether home warranty insurance must be arranged; it does not determine which claim types a contract supports.
| Point | QBCC rule |
|---|---|
| Project value | Insurance is compulsory for residential construction work valued at more than $3,300, including materials, labour and GST. |
| Premium | The contractor collects the premium from the homeowner and pays it to the Scheme. It must be included in the contract and paid before work begins. |
| Contractor | The contractor must take out the insurance and include its cost in the quote. Failure to meet these obligations can attract significant penalties. |
| Type of work | The Scheme applies only to residential construction work. Commercial building projects are not covered. |
A cost-plus contract can therefore require insurance without gaining access to non-completion cover.
What is the difference between fixed-price and cost-plus cover?
| Contract structure | Non-completion claim | Defective-work claim |
|---|---|---|
| Fixed-price residential contract | Can be covered | Can be covered |
| Cost-plus contract | Not covered | Covered only for this claim type |
“Can be covered” does not mean a claim is automatically accepted. The contract, project scope, contractor status, policy terms, limitations and exclusions still need to be considered.
Why does price certainty matter for non-completion?
A non-completion claim arises when the contractor does not, or cannot, finish the contracted work. To settle that claim, the Scheme needs to know the amount agreed under the contract to finish the work.
That creates the central difference:
- A fixed-price contract provides an agreed contractual amount against which the cost of finishing can be assessed.
- A cost-plus contract has no certainty about the final price. The QBCC says this means it cannot quantify whether the homeowner has suffered a loss.
A defective-work claim is different. It can arise when the contractor does not fix defects, and cost-plus contracts remain covered for that claim type.
Why does the QBCC recommend avoiding cost-plus contracts?
The QBCC says cost-plus contracts can limit Scheme protections because the final price remains uncertain. In its homeowner guide to home warranty insurance, dated 24 January 2025, the QBCC says these contracts can be complex and often lead to misunderstandings about the insurance.
The QBCC strongly recommends avoiding cost-plus contracts for residential building work. For a homeowner who wants the Scheme’s non-completion claim route to remain available, the contract structure is therefore a critical issue to settle before work starts.
What should be checked before signing?
- Contract type: Ask the contractor to identify clearly whether the agreement is fixed-price or cost-plus.
- Contractor status: A non-completion claim requires a fixed-price residential contract with a licensed contractor.
- Project scope: Confirm that the work is residential construction work to which the Scheme applies.
- Insurance cost: Check that the home warranty insurance premium is included in the contract and that the contractor will pay it before work begins.
- Payments: Paying more than is allowed by law or under the contract can affect the insurance.
- Claim timing: Claims must be made within timeframes that depend on the type of claim, and cover cannot be renewed after it expires.
- Contractor changes: The insurance cannot be transferred between contractors.
Does the claim maximum mean the whole project value is covered?
No. The QBCC’s guidance dated 11 May 2025 says home warranty insurance pays up to a maximum of $200,000 on claims. That is a ceiling, not an automatic valuation or guarantee of full compensation. Claims are also subject to limitations and some exclusions.
This is general information, not financial or legal advice. Before signing a contract or making a claim, check the current QBCC regulator page and the policy’s Product Disclosure Statement (PDS), and confirm the contract structure, project scope and applicable claim timeframe.
Sources
- What is home warranty insurance | Queensland Building and Construction Commission
- Home warranty insurance: A guide for homeowners | Queensland Building and Construction Commission
FAQ
Does the project-value threshold give a cost-plus contract non-completion cover?
No. Insurance may be compulsory because the residential work exceeds the threshold, but a cost-plus contract is covered only for defective-work claims.
Can a fixed-price contract support both non-completion and defective-work claims?
Yes. A fixed-price residential contract can support both claim types. A non-completion claim also requires a licensed contractor, and coverage is still subject to the Scheme’s rules and exclusions.
Why can the Scheme not assess a cost-plus non-completion loss?
The Scheme needs an agreed contractual amount to finish the work. Because a cost-plus contract has no certain final price, the QBCC says it cannot quantify the homeowner’s loss.
What else could affect a home warranty claim?
Claims may be affected by limitations, exclusions, payment amounts, contractor status and type-specific claim timeframes. Check the current regulator information and the policy’s PDS before making a claim.
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