QBE is refusing to pay out on home warranty insurance certificates issued to up to 13 Sublime clients who have been left about $1.1 million out of pocket after the builder went into administration and then liquidation earlier this year.

Department construction services director Craig Simmons likened QBE's behaviour to that of some insurance operators in the workers compensation sector, and said the apparent attempt to evade liability on a technicality was doomed to fail.

"We [the department] think this is pretty straightforward," he said. "It is a pretty simple policy."

Aler Locus and his partner Emma Watson, whose extended family of six have been squeezed into a cramped Kaleen bungalow for more than a year as a result of the Sublime debacle, agree.

Mr Locus said QBE was trying to make his, and the other affected families, bear the cost of its failure to carry out proper due diligence when it issued the policies.

Home Warranty Insurance is a statutory obligation in all jurisdictions. In the ACT, builders cannot sign a valid contract until the client has been provided with a certificate showing the insurance is in place.

QBE, whose total exposure to the Sublime collapse is estimated to be $1.1 million with individual claims capped at $84,500, has told affected owners that because the certificates were made out in the name of Sublime Builders Pty Ltd, not Sublime Constructions and Development, they were not covered.

"Cover under home warranty insurance is not triggered until the builder or building entity becomes insolvent and/or the builder dies or cannot be found," a company spokesman said. "Sublime Builders Pty Ltd does not meet the criteria."

Both the department and the affected home owners say this is not the case; that Section 92 of the ACT Building Act (2004) clearly states errors such as this cannot be used as loopholes by the insurer to avoid paying out on its policies.

"Our interpretation of Section 92 is that its intent is to say that regardless of any error, either inadvertent or deliberate, what's being insured is the thing [building] on the block. It is about what is being constructed [not the name of the building company]," Mr Simmons said.

The Master Builders Association, the only other organisation that offers home warranty insurance in the ACT, cross references the relevant sheets of the building contract with the insurance application. This act of due diligence would have detected the errors in the Sublime applications before the contracts were signed.

"They [QBE] are asking us to pay a heavy price because they did not their job properly," Mr Locus said.

He and his family, who are out of pocket at least $40,000, have been self-funding the completion of their $290,000 four-bedroom extension during the past 11 months. This is their second Christmas in an unfinished house.

"We have taken it on as owner-builders and are hoping to move in before our youngest son's second birthday in January."

Nathaniel was just four months when the contract was signed in May 2013.

QBE said it had received only one claim "which we are in the process of assessing" from a Sublime Constructions and Development collapse victim.

Mr Locus said when his family approached QBE they were told that because of "separate entity" issue the company would not be paying out on claims.

At least three other victims of the Sublime Constructions and Development collapse victims whose certificates were made out in the name of Sublime Builders received similar advice.

The long-running issue may be moving closer to resolution with the ACT's Office of Regulatory Services referring QBE's failure to honour its policies to the Australian Securities and Investments Commission last month.

"The ORS have advised us [the department] they have referred this to ASIC because it is an insurer [allegedly] failing in an obligation," Mr Simmons said.

This was confirmed by the Justice and Community Safety directorate.

"ORS has referred the matter to ASIC and has requested for them to review the issues," a spokeswoman said. "ORS has received confirmation from ASIC that the matter is under assessment."

QBE said it was not aware of the ASIC investigation but that it would co-operate with it.