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Victoria raises builders’ warranty premiums by 43%

The Victorian Managed Insurance Authority (VMIA) has announced a 43% rise in builders’ warranty premiums in anticipation of higher claims costs from builder insolvencies.

The state insurer is the main provider of builders’ warranty insurance – or domestic building insurance (DBI) as it is referred to in Victoria – and is facing a surge in claims.

“VMIA sets DBI premiums accounting for expected claims and risks,” a spokesperson told

“Recent pressures in the construction industry such as higher building costs and builder insolvencies are influencing the increase in premiums.

“VMIA is required to recoup the full costs of providing DBI and associated services, including payment of claims, over time.”

DBI is compulsory for residential works of $16,000 or more and must be acquired by builders before customers pay their deposit or any other money.

The Victorian Government announced relief packages for hundreds of customers who were left without DBI when their builders collapsed. The builders, who have taken their deposits in breach of Victorian laws, did not acquire the insurance.

Under the Victorian government’s relief schemes, eligible customers will be treated as if they have DBI.

“DBI is essential to protecting consumers in the event of death, disappearance or insolvency of their builder,” the spokesperson said.

The Housing Industry Association (HIA) says the premium hikes, which will take effect on September 1, are a “blow for Victorian home builders and their clients”.

“This premium increase, which will directly add to the fees and charges paid by home buyers, will not be accompanied by any changes to the insurance benefits,” HIA Executive Director Victoria Keith Ryan said.

“The increase also adds to many challenges facing the residential building industry. This will do nothing to help deliver an increased number of desperately needed new homes.”

VMIA says in its 2021/22 financial report it recorded an operating deficit of $249.2 million due partly to “higher than expected claims incurred across a range of portfolios”.