Domestic building insurance

Why this is important

Domestic building insurance (DBI) covers homeowners in the instance that their builder dies, disappears, becomes insolvent or has failed to comply with a Victorian Civil and Administrative Tribunal order. DBI is compulsory for builders to purchase before taking a deposit on a domestic build over $16,000. 

Responsibility for DBI is shared between several agencies: 

• Department of Government Services (DGS) – Consumer Affairs Victoria has regulatory responsibility for the disclosure requirements related to domestic building insurance. 
• The Victorian Building Authority can take regulatory action against builders if they breach conditions of registration, including prosecution or other regulatory action if they engage in work without DBI in place. Penalties for offences were increased in early 2024.
• The Victorian Managed Insurance Authority is the primary provider of DBI in Victoria since 2010, following a Victorian Government direction after private insurers exited the market.

While DBI is an established product, risks to adequately protecting and meeting the needs of consumers are increasing. Several builders have recently gone into liquidation, including Porter Davis, which did not have appropriate DBI cover, and there are concerns around the timeliness and adequacy of claims management practices.

What we plan to examine

We plan to examine whether DBI in Victoria is adequately protecting consumers building or renovating a home.

Who we plan to examine

DGS, Department of Transport and Planning, Department of Treasury and Finance, Victorian Building Authority, Victorian Managed Insurance Authority.