Victoria‘s new Developer Bond Scheme requires apartment developers to lodge a bond equal to 2% of total build costs before obtaining a building permit, with funds held to protect buyers against defects and non–compliance.
This article applies to licensed plumbers in Victoria. If you are a licensed plumber in Victoria, your insurance is meant to protect you when something goes wrong with private plumbing work. But the O’Connell decision has highlighted a practical risk: an owner may not be able to force your insurer to pay directly until your liability is established.
That means if you do not make the claim yourself, and if you refuse to accept responsibility where the defect is clearly within your work, the owner may have tosue you personally first to establish liability.
The insurer may say: “Liability has not been established yet.”
The owner may then say: “Fine. We will sue the plumber to establish liability.”
Suddenly, the plumber, not the insurer, is in the middle of the claim.
1. What O’Connell Means in Practical Terms
The O’Connell decision does not mean owners cannot make claims. The practical effect is that the insurer may not be required to pay the owner directly until the plumber’s liability is established.
Liability may be established by a court or VCAT order, by agreement, or by an admission that clearly identifies the defective work and the plumber’s responsibility for it. The important point for plumbers is that silence or blanket denial may force the owner to commence proceedings against the plumber personally.
2. Make the Insurance Claim Yourself
Do not assume the owner can simply deal with your insurer without you. The policy is your policy. You are the insured. If a genuine defect claim is made, the safer practical step is to lodge the claim yourself and ask the insurer to indemnify you.
If you do nothing, the insurer may say liability has not been established. The owner may then sue you to establish that liability. That can create legal costs, stress, reputational damage and possible personal exposure that may have been avoided by early cooperation.
3. Do Not Assume the Insurer’s Commercial Position Is the Same as Yours
An insurer may want to minimise what it pays. A plumber wants to avoid being sued personally and avoid paying any shortfall from their own pocket. Those interests may not always be identical.
The risk is this: if an insurer resists payment because liability has not been formally established, that may protect the insurer in the short term, but it may leave you exposed to the owner suing you personally to prove the claim.
Do not blindly adopt a “deny everything and wait” approach where the defect is obviously yours. If the defect is within your work and the evidence supports the complaint, denying liability may simply force the owner to prove it against you.
4. Admit Liability Where the Defect Is Clearly Your Work
Many plumbers think admitting liability is dangerous. Sometimes, refusing to admit liability is more dangerous.
If the defect is genuine, within your scope of work and supported by evidence, a properly framed admission may help protect you because it can move the matter into the insurance process and reduce the owner’s need to sue you personally.
This does not mean admitting liability for work you did not perform or defects you did not cause. It means not denying obvious liability where the work is yours and the defect is real.
Practical wording: “I accept that the [drainage / stormwater / roof plumbing] work performed by me under Compliance Certificate [number] is defective in the respects identified. I have lodged a claim with my insurer and seek indemnity for that liability.”
5. Issue Separate Compliance Certificates for Separate Pieces of Plumbing Work
Compliance certificates are not just paperwork. They can become critical evidence about what work was performed, when it was completed, who performed it and which insurance response may be available.
Where the work is genuinely separate, plumbers should issue separate compliance certificates for each separate piece or category of plumbing work. This may place the plumber in a stronger position to argue that the relevant $50,000 minimum cover applies to each properly certified piece of work, rather than allowing the insurer to argue that everything falls under one broad certificate and one $50,000 position.
The exact cover position will depend on the policy wording, the certificates and the facts. However, from a risk-management perspective, accurate separate certificates are far safer than one vague certificate that lumps together different categories of plumbing work.
6. Examples of Separate Pieces of Work
Depending on the job, separate certificates may be appropriate for separate scopes such as:
- Underground drainage
- Stormwater works
- Roof plumbing
- Sanitary plumbing
- Gasfitting
- Hot and cold water rough-in
- Bathroom plumbing
- Kitchen plumbing
- Laundry plumbing
- Separate rectification work
The certificate should match the actual work performed. If you performed separate categories of work, do not lump them into one broad certificate unless there is a proper basis to do so.
7. The Shortfall Risk if You Lodge One Broad Certificate
The shortfall risk is what plumbers need to understand.
If all work is placed under one broad certificate and a large defect claim later arises, the insurer may argue that only one $50,000 defects liability position is available. If the owner’s loss is greater, the owner may pursue the plumber personally for the balance.
| If the plumber does this | Possible risk or benefit |
| One broad certificate for all works | Insurer may argue there is only one $50,000 defects liability position. |
| Separate certificates for genuinely separate works | Plumber may have a stronger argument for separate cover positions. |
| Owner’s loss exceeds the insurer’s payment | Owner may sue the plumber personally for the shortfall. |
| Plumber admits clear liability and lodges the claim early | Greater chance the dispute is directed to insurance rather than personal enforcement. |
8. Do Not Certify Work You Did Not Do
Do not issue a compliance certificate for work you did not perform, supervise or properly verify. If you certify someone else’s work and it fails, the owner may blame you because your certificate is on the job.
The owner may say: “You certified the work, so you are responsible.”
The insurer may say: “You did not perform the defective work, so indemnity is disputed.”
That can leave the plumber exposed from both sides.
9. What Plumbers Should Do When a Defect Claim Is Made
- Identify which compliance certificate relates to the alleged defect.
- Check whether the alleged defect is within your actual scope of work.
- Gather photos, invoices, notes, messages and inspection
- Lodge the claim with your insurer yourself.
- Tell the owner the claim has been lodged.
- If the defect is clearly your work, accept liability for that part.
- Ask the insurer to indemnify you.
- Cooperate with inspections and expert evidence.
- Avoid forcing the owner to sue you personally to prove the obvious10. The Practical Message for Plumbers
If you are a Victorian plumber, do not assume your insurance will automatically protect you if you stay silent.
The safest approach is to:
- Lodge separate compliance certificates for separate pieces of plumbingwork
- Keep clear records
- Make the insurance claim yourself as soon as a defect claim is made
- Admit liability where the defect is genuinely your work
If the work is yours and the defect is real, admit it, claim on your insurance, and protect yourself before the owner has no choice but to sue you personally.
Disclaimer
This article is general information only and is not legal advice. It is based on general commentary about Victorian plumbing insurance, compliance certificates, the Licensed Plumbers (Private Plumbing Work) Insurance Order 2002 and the O’Connell decision. Plumbers, owners and insurers should obtain advice about their specific circumstances, policy wording, certificates, defects, liability and cover position.
References
The O’Connell discussion is based on publicly available commentary about O’Connell v Lentelle Pty Ltd (in liq) [2026] VSCA 76 and the Licensed Plumbers (Private Plumbing Work) Insurance Order 2002.