The Department of Transport and Planning (DTP) has advised that the Building (Statutory Insurance Scheme) Regulations 2026 (the FHWS Regulations) have now been made, prescribing the terms of cover and claims process for the First Resort Home Warranty Scheme (FHWS), that will start on 1 July 2026.
The final FHWS Regulations and Statement of Reasons are available here: https://engage.vic.gov.au/security-buying-building-a-home
The FHWS applies to building contracts for work over $20,000 and 3 storeys or less. This insurance replaces the previous Domestic Building Insurance (DBI) and will be administered by the Building and Plumbing Commission which now incorporates the previous VMIA functions.
These Regulations embed several changes to past DBI arrangements. One of the notable changes will be that consumers are automatically covered by a FWHS policy when they sign a building contract, ahead of the builder making payment for the insurance prior to the building permit being issued. This will address confusion in recent years around the timing of insurance cover starting.
The new FHWS Regulations will come into effect on 1 July 2026.
SPASA welcomes the clarification regarding what is or is not covered by the FHWS.
As Members will remember from our submission to the consultation, SPASA raised a number of key points for clarification.
However it is disappointing that there is no explicit attention and treatment to address the issue of ‘sleeper pools’ and how this affects the value of work carried by a builder each year and assessed in the insurance caps.
SPASA is also disappointed the Government has not progressed a lower maximum cap for claims of $100,000 that was proposed. They have instead included pool building in the same new higher cap of $400,000 that will apply across all building work.
Swimming pool work is a specialised type of building work which needs a bespoke framework to fully address those niche differences. SPASA will continue to advocate to regulators on behalf of the industry.
The main themes raised in submissions and key changes now confirmed in the FHWS Regulations were:
Assistance for accommodation, removal, storage
Clearer information about when insurance would help with temporary accommodation, moving and storage, and whether support would be available quickly in urgent situations.
Changes made: The maximum amount payable for these costs has increased from $10,000 to $12,000.
Cover for swimming pools
There was concern that swimming pool work might be treated differently from other domestic building work under the scheme.
Changes made: One overall limit of $400,000 for insured domestic building work includes work involving a swimming pool (as opposed to the previous $100,000 cap).
Defects due to non-compliant designs
Clarity about the operation of the exclusion for defects or non-compliant domestic building work arising from non-compliant design, specifications or plans prepared by an unregistered person.
Changes made: Removal of the exclusion of defects due to non-compliant designs prepared by unregistered professionals. This means defects due to non-compliant design, plans or specifications, will be treated in the same manner under the regulations regardless of who prepared them.
Exclusion of cost-plus contracts
Concerns raised that excluding cost‑plus contracts could leave some homeowners without protection.
Changes made: Domestic building work carried out under a cost‑plus contract will now be covered only after the domestic building work is completed.
Pausing the clock while the BPC decides the claim
Clarity about the 90-day period for the BPC to decide a claim and how it would interact with the rectification orders.
Changes made: While a rectification order is in place, the 90-day period will be paused.
Method of providing a complaint notice
Clearer rules about how complaints can be given, including whether electronic notices are allowed, and how timeframes apply if a rectification order is issued and over the end‑of‑year shutdown.
Changes made: Time for responding is paused during the industry shutdown period (from 22 December to 10 January each year). Electronic notices are permitted under existing legislation.
Minimum claim amount
Changes made: A deductible of $500 to $1,000 will apply to claims, depending on how old the defect is.
Obtaining new insurance cover
SPASA, through our insurance partner AB Phillips, has provided details to support members transition from the existing DBI cover into the new FHW insurance scheme.
Members yet to connect with AB Phillips are encouraged to do this as soon as possible to provide you with tailored cover that best suits your business needs.
Given the late delivery of the FHWS Regulations, the Government has also acknowledged that builders should not be disadvantaged if they are yet to transfer to the new insurance arrangements. The Building Commission has advised SPASA that a bulk transfer of existing insurance for pool builders will be undertaken. To learn more about this option, members should also speak with the AB Phillips team.
All the information and contact details are available here: https://www.spasa.com.au/news/important-update-for-victorian-builder-members-from-ab-phillips
SPASA is still awaiting confirmation on the details for rectification orders and minimum financial requirements (MFRs) which are also scheduled to start on 1 July 2026. The Commission has provided SPASA with early details of these two reforms and it is now understood significant changes to MFRs, including a two-year transition period to provide industry more time to prepare, will be confirmed in the coming days.
Once final details are available for rectification orders and minimum financial requirements, SPASA will arrange an online member forum with the Commission to allow member to learn more.
Announcement on VIC Government website: https://www.vic.gov.au/better-domestic-building-insurance
To view the closed consultation page, visit here: https://engage.vic.gov.au/project/security-buying-building-a-home/page/first-resort-home-warranty-scheme
SPASA’s previous news article: https://www.spasa.com.au/news/vic-buyer-protections-regulation-consultation-update