In Victoria, builders must adhere to legal requirements mandating the acquisition of Domestic Building Insurance (DBI), commonly referred to as Builder’s Warranty Insurance, for projects valued at $16,000 or more. Prior to commencing work or requesting any deposit or payment, builders are obligated to possess a Domestic Building Insurance Certificate. The eligibility for Domestic Building Insurance is a prerequisite for the retention of a Victorian building registration.
Key Features
Domestic Building Insurance in Victoria safeguards homeowners against financial losses arising from incomplete or unsatisfactory work performed by a builder or tradesperson who has passed away, disappeared, or faced insolvency. This protection extends to subsequent owners throughout the coverage period.
- The legal requirement for Domestic Building Insurance (DBI) ensures that registered builders can uphold their Victorian domestic building license.
- Builders should incorporate the cost of the insurance policy into the contract price.
- DBI affirms that a business has undergone evaluation by the insurer (VMIA) and has met all the required financial, managerial, and technical criteria.
Why Obtain Domestic Building Insurance (DBI)?
Domestic Building Insurance is a mandatory requirement under Victorian law for operating a building business. It serves as confirmation that builders have undergone assessment by the insurer, the Victorian Managed Insurance Authority (VMIA), and have met the essential criteria.
Protecting Homeowners
DBI serves as a safeguard for homeowners against financial loss in various scenarios, including a builder’s inability to complete residential building work, failure to meet a valid claim for faulty or defective work, and situations where the builder is an individual facing circumstances like death, disappearance, or insolvency, or if the builder is an organisation that ceases to exist or becomes insolvent. For policies issued on or after July 1, 2015, non-compliance with a Tribunal or Court Order is also covered.
Essential for Builder’s Registration Maintenance
Licensed building contractors undertaking residential building work valued at $16,000 or more are obligated to secure Domestic Building Insurance in the owner’s name before commencing work or accepting payment. Failure to do so may lead to prosecution by the relevant statutory authority, fines, and the risk of losing the builder’s registration.