Domestic Building Insurance (Victoria Only)
The Policy Nobody Wants to Use: The Victorian Domestic Building Insurance (DBI) scheme is commonly known as a policy of ‘last resort’. This means that unless a building project cannot be completed, or has defective works which cannot be rectified, as their builder has; died, becomes insolvent, disappears or fails to comply with an order made by the DBDRV, VCAT or a Court - then it's up to you to resolve a major dispute.
Generally speaking, this means having to go through the:
Registered Victorian Builders are required to purchase DBI on behalf of homeowners for all projects valued in excess of $16,000. The builder is also obliged to give a copy of the policy to the homeowner.
Here's an excellent Explainer Clip issued by the Victorian Managed Insurance Authority (VMIA). The VMIA is the State insurer who ultimately administer the DBI program. Like most insurances, DBI is a policy nobody wants to have to use.
Caution 1: It’s important not to confuse DBI with other insurances. Even though your builder may say they're ‘covered’ or ‘they've got insurance’ you shouldn’t automatically assume that the project has DBI. Builders should take out a range of additional insurances, such as public liability, contract works, etc.
Caution 2: Don’t allow work to commence until you have a copy of the DBI policy.
Limitations
DBI covers costs up to $300,000 to rectify:
A builder is only responsible if their building work can be proven to be: incomplete, defective, not completed to a satisfactory standard, not compliant with the regulations or BCA, or not built as required by the contract. DBI was previously known as Builder Warranty Insurance, I believe both names create a level of (questionable) comfort in the mind of consumers. Comfort that ‘if things go wrong’ the homeowner can just 'sack' the builder and find someone else to finish the job. This is generally not the case.
As the building contract provides an ongoing warranty for several years to come it’s vitally important to select the right builder. In many respects you’re contractually ‘married’ to them for 10 years - see more about due diligence HERE.
NB: Insurance rules are updated frequently, for current legislation, updated advice & queries visit: Victorian Managed Insurance Authority - Consumer Affairs Victoria - Victorian Building Authority
Brendan Watkins, Director - Builder Background Checks P/L
Brendan was CEO of the Swimming Pool & Spa Association of Victoria (SPASA) for 12 years and is the inaugural association building industry 'Hall of Fame' inductee. SPASA is the sole industry peak body for registered builders. As well as serving as CEO of the national industry association for a time Brendan sat on several government building, training and regulatory committees. He has advocated to Ministerial offices and is considered highly knowledgeable and well connected within the construction industry. Brendan presents regularly at the HIA Home Show. Builder Background Checks is augmented by access to a number of specialised industry experts including construction industry lawyers, mercantile agencies, building surveyors, architects, engineers and designers.
Disclaimer: Builder Background Checks P/L (BBC) provides advice of a general nature only. BBC does not provide formal legal, regulation or building advice. The advice published has been prepared without taking into account your specific objectives or needs. Before acting on any commentary, articles or reports provided by BBC you should consider their appropriateness to your specific objectives, financial situation and requirements. BBC shall not be liable to any party as a result of any information, services, or resources made available as part of its reports or articles contained on this website.
Generally speaking, this means having to go through the:
- Domestic Building Dispute Resolution Victoria (DBDRV)
- Victorian Civil Administrative Tribunal (VCAT)
- Involve a range of Government Agencies
- Engage an independent building dispute consultant
- Litigate through the Court system
Registered Victorian Builders are required to purchase DBI on behalf of homeowners for all projects valued in excess of $16,000. The builder is also obliged to give a copy of the policy to the homeowner.
Here's an excellent Explainer Clip issued by the Victorian Managed Insurance Authority (VMIA). The VMIA is the State insurer who ultimately administer the DBI program. Like most insurances, DBI is a policy nobody wants to have to use.
Caution 1: It’s important not to confuse DBI with other insurances. Even though your builder may say they're ‘covered’ or ‘they've got insurance’ you shouldn’t automatically assume that the project has DBI. Builders should take out a range of additional insurances, such as public liability, contract works, etc.
Caution 2: Don’t allow work to commence until you have a copy of the DBI policy.
Limitations
DBI covers costs up to $300,000 to rectify:
- Structural defects, for six years.
- Non-structural defects, for two years.
- You may find your claim is limited to only 20% of the contract price.
- The policy will not cover your advance payments.
A builder is only responsible if their building work can be proven to be: incomplete, defective, not completed to a satisfactory standard, not compliant with the regulations or BCA, or not built as required by the contract. DBI was previously known as Builder Warranty Insurance, I believe both names create a level of (questionable) comfort in the mind of consumers. Comfort that ‘if things go wrong’ the homeowner can just 'sack' the builder and find someone else to finish the job. This is generally not the case.
As the building contract provides an ongoing warranty for several years to come it’s vitally important to select the right builder. In many respects you’re contractually ‘married’ to them for 10 years - see more about due diligence HERE.
NB: Insurance rules are updated frequently, for current legislation, updated advice & queries visit: Victorian Managed Insurance Authority - Consumer Affairs Victoria - Victorian Building Authority
Brendan Watkins, Director - Builder Background Checks P/L
Brendan was CEO of the Swimming Pool & Spa Association of Victoria (SPASA) for 12 years and is the inaugural association building industry 'Hall of Fame' inductee. SPASA is the sole industry peak body for registered builders. As well as serving as CEO of the national industry association for a time Brendan sat on several government building, training and regulatory committees. He has advocated to Ministerial offices and is considered highly knowledgeable and well connected within the construction industry. Brendan presents regularly at the HIA Home Show. Builder Background Checks is augmented by access to a number of specialised industry experts including construction industry lawyers, mercantile agencies, building surveyors, architects, engineers and designers.
Disclaimer: Builder Background Checks P/L (BBC) provides advice of a general nature only. BBC does not provide formal legal, regulation or building advice. The advice published has been prepared without taking into account your specific objectives or needs. Before acting on any commentary, articles or reports provided by BBC you should consider their appropriateness to your specific objectives, financial situation and requirements. BBC shall not be liable to any party as a result of any information, services, or resources made available as part of its reports or articles contained on this website.
