Proposed changes to Victoria’s building insurance system will lead to higher premiums and should be put on hold to allow industry consultation, Assetinsure says.

The Building Legislation Amendment (Buyer Protections) Bill 2025, introduced in March, will drive up legal and building costs, the insurer warns.

Head of construction warranty insurance Mark Sinfield says the bill “needs a fundamental rethink” because it would shift Victoria to a first-resort insurance model where any homeowner complaint – however minor – could automatically trigger a claim.  

“This bill risks turning routine complaints into bureaucratic nightmares for consumers. There’s too much at risk to get this wrong, yet the government seems determined to rush it through without listening to the people who will bear the cost,” he said.

Assetinsure notes the bill could open the floodgates to frivolous or premature claims, dragging builders into expensive, time-consuming processes, with the costs passed to homeowners.

Mr Sinfield says that in Queensland, which operates a similar model, average claim resolution times stretch beyond 12 months and administrative costs are nearly four times higher than under Victoria’s current system.

“Queensland’s experience shows the risks of this model – not its success – and we should be learning from that,” he said.

The changes hand full control of domestic building insurance to the Victorian Building Authority, which Assetinsure says will create a government monopoly and strips consumers of choice on price or coverage.

“The government plans to simply rebadge the struggling VBA and add a massive new insurance portfolio to its responsibilities. It’s a recipe for gridlock,” Mr Sinfield said.

“There’s no evidence the VBA has the capability or capacity to take on this scale of reform successfully.”

Carringvale Construction Management director Bryn McMurray says the bill fails to target the “real issues” of unlicensed trades, fraudulent building licences, poor regulation and labour shortages.

“The imposition of a first-resort insurance model will only empower rogue operators ... If this legislation goes ahead in its current form, it’s the honest operators who will be forced to walk away from the residential market,” he said.