While Christmas Day typically involves light-hearted conversations about holidays, books, and movies, as well as reflections on the past year and hopes for the New Year, we suggest adding a less festive but important topic to your household discussions this Christmas: Domestic Building Insurance (DBI).

Why would we suggest incorporating such a seemingly dry subject into Christmas discussions? The reason is the well-being and security of your family and friends. For those constructing a new home, renovating, or developing buildings up to three residential levels, DBI acts as a safeguard for property owners in the unfortunate event of incomplete or defective work. It serves as a last-resort protection if the builder passes away, disappears, or becomes insolvent.

In recent years, there have been cases of builders or construction firms going into liquidation without having taken out mandatory Domestic Building Insurance, leaving customers with significant financial loss. You only have to scan the media using the search term “domestic building insurance” to find examples of building companies that have gone into liquidation without taking out domestic building insurance for their projects. 

Why is this important?

If a company goes into liquidation and the builder didn’t take out insurance, the owner can find themselves unable to complete their build, and significantly out of pocket. Insurance not only provides financial protection, but in most cases helps the homeowner find replacement builders who complete the building project to the original specification.

The Victorian Managed Insurance Authority (VMIA), the primary provider of this insurance in Victoria (though not the sole provider), settled 4,451 claims and made $112 million in payments in 2023. This allowed homeowners to complete their project after their builder had died, disappeared or become insolvent, demonstrating the value of DBI. 

In Victoria, it’s a legal requirement for building companies to take out a DBI policy for any domestic building project valued at $16,000 or above. Despite the vast majority of builders adhering to this law, occasional lapses still occur, which is surprising given that it’s a condition of their operating license.

A consumer perspective

It’s perhaps understandable that individuals might unknowingly engage a construction company without the necessary DBI in place, as consumer knowledge of insurance may not be extensive. Discussing DBI on Christmas Day can raise awareness among your family and friends and empower them, if they have a domestic building project, to insist on confirming that a DBI policy is in place before paying any money or a deposit to a builder. In Victoria, consumers can confirm if their builder has a VMIA DBI in place for their build or renovation via this link.

Next steps

To be the most informed person in the room on Christmas Day, consider reading one of the recently published articles by BRIC on the topic: "Understanding Consumers Risk and Insurance in Australia’s Home Building Market" and "Domestic Building Insurance: A Vital but Misunderstood Shield for Consumers."

For further information on DBI, feel free to contact the BRIC team.


Simon Johnson
Head of BRIC

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BRIC, as a company of Honan Insurance Group Pty Ltd is now fully owned by Marsh Pty Ltd. To find out more, speak to your broker or read the announcement