Victoria will continue developing regulations for a decennial insurance scheme for apartment building defects after the state’s upper house passed the required legislation last week.

A developer bond scheme will be implemented next year as an interim measure, but Labor MP Ryan Batchelor told parliament the new insurance product for buildings of four storeys or more will provide additional peace of mind for residents.

“The decennial insurance scheme for apartments, once it is operational, will be an alternative for developers who do not want to use the developer bond scheme and will provide better protection for consumers,” he said.

The proposed first-resort, no-fault scheme is modelled on NSW arrangements legislated in 2022. It will mean an owners’ corporation can make a defect claim without having to prove who is liable.

Decennial insurance is proposed to start once regulations to operationalise the scheme are made, with further consultation to take place during that process.

Insurers will then submit their decennial insurance products to the Building and Plumbing Commission for approval.

“We’re introducing new insurance to protect apartment owners from serious building defects for 10 years after construction is complete, to protect Victorians should issues arise,” a Transport and Planning Department spokesperson told insuranceNEWS.com.au.

“We know that defects in apartment buildings are estimated to cost Victoria more than $450 million annually, and that many owners have been involved in building disputes for many years, experiencing serious financial loss and emotional distress in the process.”

As Australia’s decennial insurance market matures, the Victorian government intends to replace the developer bond scheme with mandatory cover, to provide stronger consumer protections.

Resilience Insurance, which offers 10-year latent defects cover in NSW, says the Victorian reform will help drive wider uptake of the product.

“When two of the country’s largest property markets, NSW and Victoria, adopt the same protection, the national direction becomes unmistakable,” CEO Corey Nugent said.

“A maturing, competitive market only strengthens the industry, and we’re ready to expand our experience in Victoria.

“We’d encourage every other state to look closely at what’s now taking shape.”

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