Domestic building insurance and insolvency

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Domestic building insurance

Domestic building insurance (also called builders warranty insurance) is taken out by a builder for you on works valued at more than $16,000.

Do not pay your deposit until:

  • the builder gives you the domestic building insurance policy and certificate of insurance that applies to your property. Certificates issued on or after 1 July 2015 are required to show the cost of the insurance premium
  • you contact the insurer to check the policy number is correct and applies to your home.

Domestic building insurance covers you if your builder:

  • dies
  • is insolvent
  • disappears.

If your policy was issued on or after 1 July 2015, it also provides cover if the builder fails to comply with a final order made by the Victorian Civil and Administrative Tribunal or a court.

Domestic building insurance covers costs up to $300,000 to fix:

  • structural defects, for six years
  • non-structural defects, for two years.

In all other cases, it is up to your builder to fix or complete works.

If you claim on the policy for work that was not completed:

  • you may find your claim limited to only 20 per cent of the contract price
  • the policy will not cover your advance payments.

For more information, visit the Victorian Managed Insurance Authority website.

Who provides domestic building insurance?

If your policy was issued on or after 31 May 2010, the Victorian Managed Insurance Authority (VMIA) may be the insurer. If you do not have access to the certificate of insurance or your building permit (which list the insurer’s details), contact the VMIA to confirm if it is the insurer.

You can contact the VMIA on 03 9270 6900 or visit the VMIA website.

If your policy was issued before 31 May 2010, the VMIA will not be the insurer.

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 is usually listed on the building permit.

For more information, visit the Domestic building insurance page on the Victorian Building Authority website.

Check if a builder is eligible for insurance

The VMIA will only issue domestic building insurance to eligible builders.

To check if a builder is eligible, visit the Builder Search page on the VMIA website.

Check domestic building insurance details for a property

You can request information about a particular property from the VMIA. This includes:

  • whether a domestic building insurance policy has been issued for the property since 1 July 2015
  • the policy number
  • the builder’s name
  • whether any claims have been made under the policy
  • the remaining balance of indemnity.

Visit the Property Search page on the VMIA website.

Builder insolvency

A builder cannot operate when insolvent. To find out if your builder is insolvent:

  • if the builder is a company, contact the Australian Securities and Investments Commission
  • if the builder is a sole trader or partnership, contact the Australian Financial Security Authority
  • if you are not sure whether the builder is a company, sole trader or partnership, contact both.

A builder in administration may not be insolvent and can continue to operate. The administration process will work out whether the builder is insolvent. The Australian Securities and Investments Commission and Australian Financial Security Authority have registers of administrators and liquidators.

If you suspect your builder is insolvent, seek legal advice and contact the Building Information Line on 1300 55 75 59 between 9:00 am and 5:00 pm, Monday to Friday (except public holidays). Calling this number costs the same as a local call. Additional charges may apply if you are calling from overseas, on a mobile, or payphone.

For more information on insolvency processes, visit the Australian Securities and Investments Commission and the Australian Financial Security Authority websites.

The cost of legal advice is likely to be much less than the cost of an uninformed decision. Seek legal advice before:

  • ending the contract with your builder and employing another builder.
  • paying subcontractors.

Insolvent builders and work over $16,000

You should be able to claim on the domestic building insurance policy (also known as builders warranty insurance) if the builder is insolvent. To make a claim: 

  • lodge your claim within 180 days of becoming aware of the builder’s insolvency
  • contact the insurer to lodge a claim. If you do not have a copy of the policy or certificate of currency, the builder, building surveyor or local council may be able to provide it. If not, you can contact insurance companies that provide domestic building insurance to check whether they issued insurance for your building.

If your insolvent builder does not have domestic building insurance for work worth more than $16,000, contact the Building Information Line on 1300 55 75 59 between 9:00 am and 5:00 pm, Monday to Friday (except public holidays). Calling this number costs the same as a local call. Additional charges may apply if you are calling from overseas, on a mobile, or payphone.

If the work required a building permit, seek legal advice on the building surveyor’s obligations to require a domestic building insurance (builders warranty insurance) certificate.

Insolvent builders and work worth less than $16,000

Builders are not required to have domestic building insurance for work under $16,000.

If the builder is in administration:

  • Contact the administrator or liquidator and submit a claim as an unsecured creditor.
  • Notices of administration often appear in the press or on the trader’s website.
  • The Australian Securities and Investments Commission or Australian Financial Security Authority can provide administrator or liquidator details and have factsheets on insolvency procedures.
  • The insolvency process will determine whether you will receive any redress.
  • If you paid by credit card, contact your card provider and request a chargeback. For more information, view our Chargeback page.

If the builder is not in administration, seek legal advice.