Builders Warranty In Victoria: What You Need To Know

August 8, 2019

Builders Warranty Insurance In Victoria: What You Need To Know

Whether you’re buying a house and land package in a new development or about to start building your dream home on a block of land, there are a number of important things you need to understand. One of those is builders warranty insurance – and we’ll run through everything you need to know about it.

What is Builders Warranty Insurance?

Builders warranty insurance, also called domestic builders insurance, provides financial protection if the builders working on your home are prevented from finishing the project. It insures you against any losses incurred if your builder stops work due to injury, death, insolvency, or being deregistered. In Victoria, this insurance covers costs of up to $300,000 should you need to make structural and non-structural repairs. This means that, even if your original builder cannot complete their work to a high standard, your project can still be completed without a heavy financial burden. Builders warranty insurance in Victoria is regulated by the Victorian Managed Insurance Authority (VMIA).

What To Do Before You Start

Builders warranties apply to anyone building a home – whether you’re using a contractor or building company, or doing it yourself. Builders warranty insurance is added on top of the protection provided by those existing warranties. However, depending on where you are in Australia, the regulations around domestic building insurance will differ.

In Victoria, builders warranty insurance is a non-negotiable requirement for any domestic building projects valued over $16,000. Builders warranty insurance can only be provided by a VMIA approved list of brokers, or DBI Distributors, which your builder arranges on your behalf. Builders are covered from the start date on the building contract, or from the date of the building permit – whichever comes first.

Why Is It Good For Home Owners?

In Victoria, builders warranty insurance is covered under the Domestic Building Contracts Act 1995. This means that no consumer guarantees or implied warranties can be signed away – no matter what a builder may tell you.

Domestic building insurance in Victoria allows you to make sure your builder is always using good workmanship, delivers everything outlined in your contract, and that everything is in working order when the job is done. It also financially protects you and your home from the unexpected.

What’s Covered Under Builders Warranty In Victoria?

In Victoria, builders warranty insurance protects you as the homeowner—in the event that your builder is unable to finish work on your project. This means it only covers very specific issues in Victoria. According to state government legislation (Building Act [1993] and the Domestic Building Contracts Act [1995]), builders warranty insurance covers –

  • Non-structural defects caused by defective design (if the builder designed it), workmanship, or material. This could include problems like chipped tiles, broken or blocked pipes, faulty joinery, etc.
  • Structural defects caused by defective design (if the builder designed it), workmanship, or material. This could include poorly waterproofed doors and windows, issues involving internal load bearing walls, leaking balconies, etc.
  • Other costs, including accommodation, legal fees, removal and storage fees, or loss of deposit.

Remember that in Victoria, builders warranty insurance only covers problems caused by your builder, and only for a limited time period. While you will be covered for incomplete work up to 20% of the contract price, you are not covered for damage caused by anyone other than your builder, or any uncontracted variations. In Victoria, structural expenses are covered for 6 years after the completion of a project, with non-structural expenses only covered for 2 years.

The Finer Details

It doesn’t matter how much your build ends up costing – any domestic building project is covered under the basic builders warranty, regardless of whether there was a written contract. Also, the warranty transfers to any new owners for up to 10 years following the work’s completion.

Remember, though, that if your project is over $16,000 – in Victoria it’s required that your builders have the appropriate level of insurance. Make sure you ask your builder for copies of their insurance certifications. If you’re renovating, it’s also important to speak to your home and contents insurer before work begins to check what’s covered. You may need to up your policy to make sure you’re adequately protected for any changes or additions to your home.

How Do I Get It?

Your builder is responsible for securing insurance. Builders often take out several different kinds of insurance, so make sure you see their DBI or builders warranty insurance specifically. If you are still unsure if your builder has got you covered, you can look up your property using VMIA Property Search.

Builders warranty insurance is not only a legal requirement in Victoria- it is essential to securing peace of mind when it comes to trusting your builders to get your project right. This insurance guarantees that your project will be completed to the highest possible standard, no matter what.

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