The Building and Plumbing Commission (BPC) has released information via its practitioner EDM on the new Home Warranty insurance.
From Wednesday 1 July 2026 the BPC is introducing Home Warranty which is the new mandatory insurance cover builders must purchase on behalf of the homeowner, for residential building projects up to 3 storeys and valued at more than $20,000.
Home Warranty replaces DBI from 1 July 2026 and provides much greater protection for homeowners.
Home Warranty applies to new eligible domestic building work in Victoria. One key question members have been asking now has been answered: All existing DBI policies continue under the DBI scheme.
The BPC is the sole, not for profit, provider of Home Warranty with the domestic building private insurance market closed from 1 July 2026. Existing DBI policies will remain in place until their expiry, with private insurers supporting those policies under their current terms and conditions.
Home Warranty covers homeowners for major defects, non-compliant or incomplete work in cases where the builder is unable or unwilling to complete or fix the work. This is a change from the previous DBI where the homeowner was only covered on death, disappearance, or bankruptcy.
Home Warranty may be available to the homeowner up to 6 years from the date the property was occupied including six years for structural defects and two years for non-structural defects.
Home Warranty does not cover homeowners who use unregistered builders for their projects.
The BPC shared that builders will see a premium increase of no more than 5% on what builders currently pay for Domestic Building insurance (DBI). The rise reflects the increase in maximum coverage from $300,000 under DBI to $400,000 under Home Warranty, and the increased protection for homeowners when something goes wrong.
The homeowner will be covered from the earliest date of when the builder pays the applicable premium, starts carrying out building work, or signs a Major Domestic Building Contract (MDBC).
Builders will have 10 days to pay the Home Warranty insurance premium from the date the contract is signed.
The homeowner is protected under Home Warranty, with the following cover available:
The maximum cover available is $400,000
Structural or major defects including waterproofing and weatherproofing are covered up to 6 years after the work is completed or when the building contract is terminated
Non-structural defects such as painting and joinery, are covered up to 2 years after the work is completed or when the building contract is terminated
Non- compliant work that does not meet the required regulations is also covered
Incomplete work is capped at 30% of the total contract price including agreed variations
Lost deposits when the building work has not started.
Out of pocket costs including accommodation and removal and storage are capped at $12,000
Cover to secure a building site is capped at a maximum of $5,000
Swimming pools are also covered and capped to a maximum of $400,000
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. As mentioned in other earlier articles, 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.
You can read more about the scheme by reading this PDF from the BPC Click Here.
You can also read about the regulations in SPASA’s Advocacy article here: https://www.spasa.com.au/news/vic-first-resort-home-warranty-scheme-regulations-finalised
Further, insurance-specific, information is available here: https://www.spasa.com.au/news/important-update-for-victorian-builder-members-from-ab-phillips
The information on proposed MFRs is available here: https://www.spasa.com.au/news/vic-proposed-minimum-financial-requirements