Understanding domestic building insurance and why it is important

For consumers:

• Insurance for building and plumbing work

Insurance information for practitioners:

• Insurance

For consumers:

• Domestic building insurance and insolvency

For building practitioners:

• Domestic building insurance

For consumers:

• Check you have a VMIA-issued Domestic Building Insurance Certificate by searching your policy number on the VMIA website. The search is available for certificates issued by VMIA after 1 July 2015. Visit the VMIA website.

For builders:

• The BuildVic portal is the Victorian Managed Insurance Authority’s secure domestic building insurance portal where building practitioners can purchase domestic building insurance, view certificates of insurance, access their letter of eligibility and check current job limits and premium rates.

To register for access to BuildVic or for more information on DBI, contact one of the DBI distributors.

As a consumer you should receive a copy of the DBI certificate of insurance within seven days of the builder receiving the policy documents.

In the event that a client needs to make a claim against their DBI policy, for policies issued before 1 July 2014, the client can claim up to $200,000.

For policies issued after 1 July 2014, the client can claim up to $300,000.

For more information about what is covered by a DBI policy, visit the Victorian Managed Insurance Authority’s DBI fact sheet.

DBI provides protections to homeowners and clients from financial losses arising from incomplete or defective work carried out by a builder or trades person who has died, disappeared or become insolvent. The protection extends to future owners of the property, subject to time limitations.

It covers the client and future owners against loss or damage resulting from non-completion of building work or from:

Structural or non-structural defects in the building work;

A breach of any warranty implied under the Domestic Building Contracts Act;

A failure to maintain a standard or quality of building work specified in the building contract;

Conduct by the builder or trade contractor in connection with the building contract that contravenes a provision under the Competition and Consumer Act or the Fair Trading Act.

When engaging a builder for construction or renovation work, consumers should ensure the builder has a valid DBI policy in place. This is your right as a consumer.

Consumers can check with the insurer to ensure the DBI policy is valid before work commences.

• You can ask your builder for a copy of the DBI Certificate of Insurance relating to your individual property if it has not already been provided to you prior to work commencing or you making any deposit payments under the building contract.

If you cannot find the certificate of insurance, contact the builder/building surveyor or local council to find out the name of the insurer and the policy number. This information is usually listed on the building permit.

Consumers should ensure there is a valid DBI policy in place for their individual property before transferring any money to a builder, including a deposit.

If a valid DBI policy is not in place, any payments made may be at risk and unrecoverable.

It is the builder’s responsibility to purchase DBI for the building project on behalf of the client.

Homeowners and renovators are protected from faulty building and plumbing work by insurance held by the builder or plumber.

Domestic building insurance (DBI)is required to be provided by a builder when the cost of building work under the contract with the builder is more than $16,000, including labour and material costs.

DBI provides cover for incomplete or defective building works.

A claim against this insurance can only be made if the builder dies, goes bankrupt or otherwise cannot be found or has failed to comply with a Tribunal or Court Order where DBI was issued by the Victorian Managed Insurance Authority (VMIA) on or after 1 July 2015.

As a practitioner, when you sign a major domestic building contract for work valued at more than $16,000, you need to ensure a domestic building insurance (DBI) policy is in place.

If this is not in place and has not been provided to the client, then the contract is conditional upon the client receiving the policy document.

Without a domestic building insurance policy, a builder cannot enforce the contract, commence work or receive any money from the client, including the deposit, until the insurance is in effect and the client has been given a copy of the insurance certificate.

The builder must give the client a copy of the domestic building insurance certificate within seven days of receiving it.

Builders are responsible for providing their client with a copy of the DBI policy and certificate of currency covering the client’s property.

The VBA requires evidence that a person holds the required insurance or is eligible to purchase the required insurance before it can grant or renew a building registration.

Domestic building work includes, but is not limited to:

• The construction, renovation, removal or demolition of a home.
• Work associated with the construction of renovation of a home such as landscaping, paving, fencing, retaining walls, swimming pools and spas.
• The construction of garages, decks and pergolas on residential land.
• Site works for the above projects.

The BuildVic portal is the Victorian Managed Insurance Authority’s secure domestic building insurance portal where building practitioners can purchase domestic building insurance, view certificates of insurance, access their letter of eligibility and check current job limits and premium rates.

To register for access to BuildVic or for more information on DBI, contact one of the DBI distributors.

If the VBA learns a builder is no longer covered by the required insurance, we must suspend their registration.

The effects of suspension include being unable to work as a registered building practitioner under the duration of suspension and any building permits issued in your name as the builder are suspended.

In February 2024, the Victorian Government introduced changes to the Domestic Building Contracts Act 1995 and the Building Act 1993 to give the VBA additional powers to penalise builders if they demand or receive money under a major domestic building contract for work valued at more than $16,000.

• The first offence will apply where the conduct has been committed knowingly or recklessly. The maximum penalty level for this offence will be set at 500 penalty units (approximately $96,000) for a natural person and 2,500 penalty units (approximately $480,000) for a body corporate.
• The second offence will apply where the conduct has been committed under a standard of strict liability. The maximum penalty level for this offence will be set at 240 penalty units (approximately $46,000) for a natural person and 1,200 penalty units (approximately $230,000) for a body corporate.

Builders will be required to give a notice of suspension to any person who has a building contract with you and if you are a director of a company that is registered as a building practitioner, the registration of the company may also be suspended.

Professional engineers who hold endorsement to work in the building industry through the Business Licensing Authority will have their endorsement suspended if they are no longer covered by the required insurance.

As a building surveyor, you have a legal obligation to ensure that builders have a valid DBI policy before you issue building permits.

Under section 24A of the Building Act 1993, the Relevant Building Surveyor (RBS) must not issue a building permit unless the RBS is satisfied the named builder/building company on the building permit is identical to the named builder/building company on:

• The major domestic building contract; and
• The certificate of insurance from the insurer.