Understanding Domestic Building Insurance (DBI)

Domestic Building Insurance (DBI) is an important, but often misunderstood insurance product.

Within Victoria the insurance is available through a government backed insurer, the Victorian Managed Insurance Authority (VMIA), with Master Builders Insurance Brokers (MBIB) being a direct VMIA distributor of DBI.

DBI covers the homeowner (and subsequent owners) where the contracted building work is incomplete or defective. The insurance responds when the builder has either died, disappeared become insolvent, or has failed to comply with a tribunal or court order. The cover last up to six years from completion of the domestic building work, and is a legal requirement to be purchased by the builder on behalf of the homeowner for any projects valued over $16,000.

DBI protects the homeowner by providing cover up to 20% of the building contract price for incomplete works – inclusive of costs such as temporary fencing, locksmiths, contract works insurance and building permits. The coverage provided is for any additional costs the homeowner would have to pay over and beyond what they would be paying the original builder. DBI policies have overall policy limits, providing homeowners with coverage up to $300,000, which is inclusive of all defective and incomplete work and other losses claimed.

Across the building industry, DBI provides significant support for all residential builders through delivering improved consumer confidence. Through having a DBI policy for their project, irrespective of the size or experience of the builder, homeowners have the same level of cover and peace of mind knowing the VMIA policy will respond if the builder passes away, disappears, or becomes insolvent.

For any questions on DBI, or any other form of insurance, contact MBIB today.

Newly announced Building & Plumbing Commission

What has happened?

The Victorian Government has announced they will in 2025 legislate the integration of the Victorian Building Authority (VBA), Domestic Building Dispute Resolution Victoria (DBDRV) and VMIA’s Domestic Building Insurance (DBI) functions into a single entity.

This will create a single integrated building sector regulator bringing together the functions of licensing, compliance and discipline, dispute resolution and insurance.

I’ve made a DBI claim with VMIA – how will this affect me?

It is important to note that there will be no immediate changes to how we will manage your DBI claim.

All terms and conditions of existing VMIA-issued DBI policies will not change.

VMIA will continue to manage all claims on DBI policies that have been issued until the DBI function is transferred to the Building & Plumbing Commission, at which point all live claims will transfer to the Building & Plumbing Commission. There will be no disruption to your claim from this transfer.

Updates to follow as they come to hand.

I have a VMIA DBI policy, but I haven’t made a claim – how will this affect me?

It is important to note that all terms and conditions of existing VMIA-issued DBI policies will not change.

There will no changes to how DBI claims are lodged or managed in the short term.

We will continue to provide regular updates on the proposed Building & Plumbing Commission, but for now we can advise:

• If you have a VMIA-issued DBI policy and need to make a claim before the Building & Plumbing Commission is established, you will need to make this claim with us. 
   
• When the Building & Plumbing Commission is established, all VMIA policies will automatically transfer to the Building & Plumbing Commission. This means that all claims made after this date must be made to the Building & Plumbing Commission, even if your DBI policy has VMIA branding. 
   
• New DBI policies that we issue after this announcement will continue to use VMIA’s current terms and conditions. 
   
• DBI Policy Verification will continue working after the transition to the integrated regulator, as will QR codes linking to DBI Policy Verification that exist on all VMIA DBI certificates issued since 30 April 2024.

For any questions on DBI, contact MBIB today.

I’m a builder – how will this affect me?

If you currently have eligibility with VMIA, there will be no immediate changes to how you purchase DBI policies or request changes to your level of eligibility. You will continue to purchase policies, and interact with your DBI Distributor, as you currently do. For further information, please contact your DBI Distributor.

If you don’t currently have eligibility with VMIA, you can apply for eligibility with VMIA through MBIB until the functions transfer to the Building & Plumbing Commission. Any applications still in progress at that time will transfer to the Building & Plumbing Commission.