The State Government’s proposed Building Legislation Amendment Bill foreshadows a number of changes for the building industry in Victoria including changes to Domestic Building Insurance (DBI) which have now been postponed in part.

The bill proposes that from 1 July 2014, DBI would experience major changes including:

  • The inclusion of three new triggers covering the following events:
    • Failure by a builder to comply with a rectification order issued by the Victorian Building Authority (VBA);
    • Where a builder has had their registration suspended, either temporarily or permanently; and/or,
    • Where the builder is incapacitated and unable to complete the works.
  • The minimum requirement for Home Warranty cover will increase from $12,000 to $16,000.
  • The maximum amount payable under the policy will increase from $200,000 to $300,000.

In addition, the government proposed to establish a new consumer protection fund from 1 July 2015 to replace the current Domestic Building Insurance scheme offered through QBE and underwritten by the Victorian Managed Insurance Authority (VMIA). The VMIA will continue to operate under the current authority including the management of the new fund, with the VBA expected to take full control of the fund from 1 July 2016.

Following recent discussions between Master Builders and the State Government where significant concerns of Master Builders members where tabled around the structure of the scheme, the government confirmed it will engage in further industry consultation on the matters detailed in their legislation.

Master Builders will be part of the consultation process and will be acting in the interests’ of members to improve the overall operation of the building industry.

Approved changes from the 1 July 2014

On 29 May, a new Ministerial Order was published stating that effective from the 1 July 2014 there would be a change to the minimum contract value requiring DBI cover increasing from $12,000 to $16,000 and that the maximum payable under the DBI policy will increase from $200,000 to $300,000.

We are yet to receive confirmation of the formal introduction of the three additional triggers and are seeking government feedback as to when these changes will be formalised.

With the minimum contract value requiring DBI increasing from $12,000 to $16,000 Master Builders has been notified that no policies from $12,001 to $15,999 will be issued by QBE as agents for the VMIA from the 1 July 2014.

Domestic Building Insurance policy pricing

Proposed changes, as well as changes that have been implemented from the 1 July 2014 will most likely see an increase in the cost of purchasing the DBI, however at this stage Master Builders hasn’t been advised of any proposed change to the cost of the policy.

Master Builders is working to minimise the cost and will notify members once further information comes to hand. It would be pragmatic for you to review your future pipeline of work and consider if current contract margins will be able to withhold any increase.

For more information, call Master Builders on (03) 9411 4555.