What Does Domestic Building Insurance Actually Cover in Victoria?
Domestic building insurance (DBI) in Victoria covers up to $300,000 to fix structural defects for six years and non-structural defects for two years — but it can be claimed in limited circumstances: when your builder dies, becomes insolvent, or disappears before completing the work.
What Is Domestic Building Insurance?
Domestic building insurance — sometimes called builders’ warranty insurance — is a policy your builder must take out on your behalf before starting work. It exists to protect you financially if something goes wrong with your builder and they can no longer fix it themselves. Under Victorian law, DBI is required when the cost of building work is more than $16,000, including labour and materials.
It is important to understand that DBI is not a general building warranty or a guarantee that all defects will be fixed. As Consumer Affairs Victoria notes, DBI covers defects in limited circumstances. It is a safety net for specific, serious situations — not a catch-all for every building problem. Generally, DBI is not required for residential buildings that contain more than three storeys of accommodation.
When Can You Make a DBI Claim?
DBI is what is known as “last resort” insurance. You can make a claim when your builder is unable to fix the problem because of one of these triggering events:
- Your builder dies
- Your builder is declared insolvent (goes bankrupt or into liquidation)
- Your builder disappears and cannot be contacted
- For policies issued after 1 July 2015: your builder fails to comply with a VCAT or court order within the required timeframe
That last point is worth noting. If you have a DBI policy issued after 1 July 2015 and your builder ignores a tribunal order to fix defective work, you may be able to claim on the insurance — even if your builder is still technically trading.
If none of these triggering events apply — for example, if your builder is still operating but simply refuses to fix a problem — DBI will not cover you. In that situation, you may need to pursue the matter through VCAT or another dispute resolution pathway.
What Does DBI Cover — and What Doesn’t It?
This is where many Victorian homeowners get caught out. DBI does cover certain defects and incomplete work, but there are important limits. The table below sets out the key differences between what is covered and what falls outside DBI, based on current DBI requirements under Victorian law.
| Covered by DBI | Not covered by DBI |
| Structural defects discovered within 6 years of completion (up to $300,000) | Defects where the builder is still trading and able to fix the work |
| Non-structural defects discovered within 2 years of completion (up to $300,000) | Disputes over contract variations, delays, or pricing |
| Incomplete work where the builder has died, become insolvent, or disappeared | Work where the contract price is $16,000 or less |
| Non-compliance with a VCAT or court order (policies issued after 1 July 2015) | Buildings of more than 3 storeys |
| Defective work that falls below the standard required by the contract or by law | General dissatisfaction with workmanship where no triggering event has occurred |
There is also a significant limit on incomplete work claims. Coverage for incomplete work may be limited to 20% of the contract price, and advance payments you have already made to the builder are excluded from coverage.
DBI can be useful, but only in specific circumstances. Before assuming you can claim on the policy, it is worth getting clear advice on whether a triggering event has occurred and what evidence you may need. Boutique Lawyers assists Victorian homeowners with building disputes, DBI issues, and claims involving defective or incomplete work.
How Long Does DBI Coverage Last?
The warranty periods under DBI depend on whether the defect is structural or non-structural. These coverage periods are set out in Victoria’s Domestic Building Insurance Ministerial Order and reflected in current DBI policy wording:
| Defect type | Coverage period | Maximum payout |
| Structural defects (e.g. foundations, load-bearing walls, roof structure) | 6 years from completion | Up to $300,000 |
| Non-structural defects (e.g. cracked tiles, paint issues, plumbing fittings) | 2 years from completion | Up to $300,000 |
These timeframes start from the date the building work is completed — not from when you discover the defect. That means if you find a structural problem five years after your build was finished, you may still be within the window. But if you find a non-structural issue three years later, DBI may no longer apply. A building insurance claim lawyer can help you work out whether your claim is still within time.
How to Check If You Have DBI
Your builder is required to give you a copy of the DBI policy and a certificate of currency before accepting any deposit or payment. If you did not receive these documents, that does not necessarily mean you are uninsured — but it does mean you may need to track down your policy details.
The Victorian Managed Insurance Authority (VMIA) is a significant provider of DBI in Victoria, though there are now a small number of other commercial providers. If you cannot locate your policy, contact your builder, your building surveyor, or your local council — they may be able to help you find it.
Steps to Take If You Need to Make a Claim
If you believe you have grounds for a DBI claim, acting quickly is important. You must lodge your claim within 180 days of becoming aware of the builder’s insolvency. Here is a practical overview of what to do:
- Locate your DBI policy — check your building contract documents, or contact the VMIA, your building surveyor, or your local council
- Document the defects or incomplete work — take photographs, get independent inspection reports, and keep a written record of what has gone wrong
- Confirm the triggering event — make sure your builder has actually died, become insolvent, disappeared, or failed to comply with a VCAT or court order
- Lodge the claim with your insurer within 180 days — provide your policy details, evidence of the defects, and proof of the triggering event
- Seek legal advice early — a domestic building insurance lawyer can review your policy, assess the strength of your claim, and help you navigate the process
If your claim is denied or only partially accepted, you have options. VCAT can hear disputes between property owners and warranty insurers, so you may be able to challenge the decision.
What Are Implied Warranties — and How Are They Different from DBI?
Many homeowners confuse DBI with implied warranties. They are two separate protections under Victorian law.
Implied warranties come from the Domestic Building Contracts Act 1995. They are automatic legal obligations that apply to every domestic building contract in Victoria, regardless of what the contract says. Under implied warranties, your builder must:
- Carry out work in a proper and workmanlike manner, in accordance with plans and specifications
- Use materials that are good, suitable for the purpose, and new (unless otherwise stated)
- Comply with all relevant laws and legal requirements
- Complete the work by the date specified in the contract
- Ensure new homes and extensions are suitable for occupation when completed
These warranties transfer to a new owner for up to 10 years from completion of the work. That means if you buy a home and discover defects that breach the implied warranties, you may have a claim against the original builder — even though you were not the person who signed the contract.
In general, a contract term cannot remove your right to rely on the implied warranties. However, settlement terms can be legally sensitive, especially where known defects are being resolved, so get legal advice before signing any waiver or release
The key difference is that implied warranties give you a right to go after your builder for defective work. DBI gives you a right to claim on the insurance when the builder can no longer fix it. Under the Building Act 1993, building actions are generally subject to a 10-year long-stop period, usually measured from the occupancy permit date or, if no occupancy permit was issued, the certificate of final inspection date. Exceptions may apply.
If you are dealing with defective building work, it is important to understand whether your issue sits under implied warranties, DBI, or both. Boutique Lawyers can help you assess your position, identify the right pathway, and take practical steps before important time limits affect your claim.
The Numbers: How DBI Claims Play Out in Practice
A 2025 audit by the Victorian Auditor-General’s Office (VAGO) gives a clear picture of how DBI claims are handled in Victoria. Between 2019–20 and 2023–24, the VMIA received 14,342 DBI claims. Of those, 24% were fully accepted, 42% were partially accepted, and 32% were denied.
The median settlement was $34,942, while the mean was $61,698, which suggests a smaller number of large claims pull the average up. The VAGO report also found that the VMIA does not consistently provide homeowners with all the information about how it assesses claim offers, making it harder for homeowners to understand whether they are receiving a fair outcome.
The same audit revealed that the VBA does not verify that valid DBI policies exist before issuing building permits, meaning building work can begin without DBI in place — putting homeowners at risk from the start.
What’s New on 1 July 2026?
From 1 July 2026, Victoria is expected to move toward the First Resort Home Warranty Scheme, which may change how homeowners access building insurance protections for eligible residential building work.
Under the current DBI model, registered builders and tradespeople must take out domestic building insurance for work over $16,000. From 1 July 2026, the new Home Warranty scheme will apply to eligible domestic building projects up to three storeys and valued at more than $20,000. A key change is that the new scheme is “first resort” — meaning homeowners can make a claim when a building issue is first identified, rather than waiting for the builder to become insolvent or disappear.
The new scheme also includes automatic coverage when a homeowner enters an insurable domestic building contract, even if the builder has not paid the insurance premium. This is intended to give homeowners protection under the scheme without relying on the builder having paid the premium first.
If you have an existing DBI policy from a contract signed before 1 July 2026, your coverage under that policy is expected to continue for its full term. For new contracts signed after that date, the Home Warranty scheme is expected to apply. If you are unsure how the transition affects your situation, speaking to a building insurance claim lawyer can help clarify your position.
Frequently Asked Questions
What happens if my builder goes bankrupt and I don’t have DBI?
If your building work cost $16,000 or less, DBI was not required. In that case, you may be able to submit a claim as an unsecured creditor through the builder’s administration or liquidation process — but recovery is often limited. If the work costs more than $16,000 and the builder failed to take out DBI, you may still have legal options. Getting legal advice quickly is important in these situations.
Can I make a DBI claim if my builder is still trading but refuses to fix defects?
Generally, no — DBI is last-resort insurance, so it requires a triggering event such as death, insolvency, or disappearance. However, if your DBI policy was issued after 1 July 2015 and the builder has failed to comply with a VCAT or court order, you may be able to claim. If no triggering event applies, you would typically need to pursue the builder directly through dispute resolution or VCAT.
Is the new Home Warranty scheme better than DBI?
The First Resort Home Warranty Scheme is designed to address many of DBI’s limitations. Under the new model, homeowners can make a claim when a building issue is first identified, rather than waiting for the builder to become insolvent. Coverage is also automatic, even if the builder has not paid the premium. These changes are designed to give homeowners more practical protection, though the full impact will depend on how the scheme operates in practice after 1 July 2026.