What is domestic building insurance? Learn what it covers, who needs it and the key 2026 Victoria changes.
If you are planning a renovation, extension or new home build, you may be wondering what is domestic building insurance and whether it is something you actually need.
The answer depends heavily on where you live.
Domestic building insurance, often shortened to DBI, is particularly associated with Victoria, Australia, where it has historically provided financial protection to property owners when certain domestic building work is left incomplete or defective. However, major changes came into force on 1 July 2026, when Victoria introduced a new Home Warranty scheme for eligible new building contracts.
If you are in the UK, you may also have landed here while looking for information about buildings insurance, builders’ warranties or insurance for a construction project. Although these products can sound similar, they are not necessarily the same type of insurance.
This guide explains the differences, what cover may apply during a building project and what homeowners should check before work begins.
Disclaimer: This article is for general information only and does not constitute financial, insurance or legal advice. Insurance requirements and policies vary according to your location, property and specific situation. Always check the current rules and speak to an appropriate insurance provider, insurance agent, solicitor or construction lawyer where necessary.
What Is Domestic Building Insurance in 2026?
Historically in Victoria, Australia, domestic building insurance was a form of builders warranty insurance designed to protect homeowners when eligible domestic building work was incomplete or defective and certain conditions relating to the builder were met.
However, there is an important change for 2026.
From 1 July 2026, Victoria’s Building and Plumbing Commission (BPC) introduced Home Warranty insurance for new eligible domestic building contracts. It replaces Domestic Building Insurance for eligible new work contracted from that date. Existing DBI insurance policies remain valid and continue under their original scheme.
This means articles that simply state that every Victorian builder must obtain DBI for work costing more than A$16,000 are now out of date when discussing new contracts.
For eligible new projects, Home Warranty generally applies to domestic building work valued at more than A$20,000, subject to the scheme’s eligibility criteria and exclusions. The new scheme may provide up to A$400,000 in total assistance per home.
How Did the Previous Domestic Building Insurance Scheme Work?
Before 1 July 2026, a registered builder generally had to arrange domestic building insurance for eligible domestic building work costing more than A$16,000.
It operated largely as a last-resort scheme.
An existing DBI policy can generally be triggered if the builder:
- dies
- disappears
- becomes insolvent
- or, for certain policies issued from 1 July 2015, fails to comply with a final tribunal or court order.
For policies issued on or after 1 July 2014, cover can be up to A$300,000 per home. Existing policies can provide cover for structural defects for up to six years and non-structural defects for up to two years. Claims for incomplete works can be limited to 20% of the building contract price.
If you already hold a DBI policy, therefore, don’t assume that the introduction of Home Warranty means your original insurance coverage has disappeared. Existing policies remain under the previous system.
What Does Victoria’s New Home Warranty Cover?
The new Home Warranty scheme is broader than the previous last-resort model.
It may provide assistance where eligible work is:
- incomplete
- defective
- non-compliant.
It may also cover certain related losses and additional costs, including lost deposits in some circumstances, accommodation expenses, removal and storage expenses and costs associated with securing an incomplete construction site.
Major defects may be covered for up to six years after eligible work is completed, while other defective or non-compliant work may be covered for up to two years. Cover is subject to the detailed scheme rules, limits and exclusions.
The homeowner should therefore retain their written contract, plans, specifications, payment records, building permit documentation, agreed variations and insurance paperwork.
Who Arranges the Insurance?
For eligible building work in Victoria under the new system, the registered builder is responsible for paying the Home Warranty premium.
The premium must generally be paid before the earlier of:
- 10 business days after signing the building contract; or
- the commencement of the eligible work.
Once payment is accepted, the Building and Plumbing Commission issues the homeowner with a Notice of Cover. Property owners should check that details such as the builder, registration number, construction site address, insured work and assessed value match the building contract.
Keeping a copy of the policy or Notice of Cover alongside your other property documentation is the best way to make an insurance claim easier if problems arise later.
What Is a Major Domestic Building Contract?
Victoria’s rules distinguish larger building projects from smaller jobs.
Consumer Affairs Victoria currently states that builders must use a major domestic building contract where the domestic building work costs more than A$10,000. The builder should also be appropriately registered for the work being undertaken.
Domestic building work can include considerably more than simply constructing a new home. Depending upon the project, it can include:
- building a house
- extensions
- alterations
- major renovation work
- demolition
- certain garages and carports
- swimming pools and spas
- retaining structures
- some landscaping associated with residential building
- heating and ventilation work
- drainage and water supply work
- plans and specifications
- associated site works.
The Domestic Building Contracts Act 1995 remains in force in Victoria, alongside the Building Act 1993 and current building regulations.
Because legislation and Ministerial Order requirements have changed over time, homeowners should be cautious about relying on an old blog post, forum discussion or even an older Product Disclosure Statement when checking their current legal requirement.
What About an Owner Builder?
There are special rules if you are an owner builder rather than using a registered general contractor or domestic builder.
For example, an owner-builder selling a Victorian property shortly after carrying out substantial building work may have insurance and inspection obligations.
The Building and Plumbing Commission states that owner-builders selling qualifying recently completed work may need appropriate insurance or Home Warranty cover and a Defects Inspection Report. Requirements depend upon when the work was completed, its value and when the property is sold.
An inspection report can be particularly important because it records defective building work, incomplete works or other identified problems before the real estate transaction takes place.
If you are selling an owner-built property, obtaining proper legal advice before signing a contract is sensible.
Domestic Building Insurance vs Home Insurance
One of the easiest mistakes to make is assuming DBI is simply another name for ordinary home insurance.
It isn’t.
Standard buildings or homeowners insurance is generally intended to protect against physical damage caused by specified events.
For example, UK buildings insurance commonly protects the structure of a property, including elements such as the walls, roof, floors and permanent fixtures. Depending on the policy, insured events can include fire, storms, flooding, subsidence and water damage from leaking pipes.
That is different from insurance dealing with defective work carried out during construction.
A standard homeowners insurance policy might pay for physical damage caused by a covered event but refuse to pay for the cost of correcting poor workmanship itself.
This is why potentially expensive coverage gaps can arise if property owners assume one insurance policy protects them against every possible risk.
What Is the UK Equivalent?
There isn’t a direct UK equivalent using exactly the same Victorian DBI system.
UK homeowners may instead encounter several separate forms of protection, including:
Buildings insurance
Buildings insurance protects the physical structure of the home against specified risks.
If you have a mortgage, your mortgage lender will usually require adequate buildings insurance. Leasehold arrangements can be different because the freeholder or management company may arrange the building policy.
Contents insurance
This protects personal belongings and personal property rather than the structure itself.
Furniture, electronics, clothing and other contents are normally separate from buildings insurance.
New home or structural warranty
A new-build warranty is designed primarily to provide protection relating to construction defects in a new property.
This is different from ordinary home insurance covering events such as fire or storm damage.
Renovation or contract works insurance
If you are undertaking a major renovation, extension or structural alteration, your existing insurance company should be told about the work.
Depending on the project and insurer, you may need additional insurance coverage specifically designed for building work.
Never assume your normal home insurance automatically offers comprehensive protection while significant construction work is taking place.
What Is Builder’s Risk Insurance?
If you read American websites, you are also likely to encounter builder’s risk insurance or course of construction insurance.
Again, these aren’t the same thing as Victorian DBI.
A builder’s risk policy is generally designed to protect a construction project itself while work is underway.
The person taking out the policy could be a property owner, developer or contractor with a financial interest in the building project.
For example, State Farm describes its US builder’s risk insurance as potentially providing property and liability coverage for structures under construction, damaged equipment, materials and supplies, subject to its policy terms.
Depending on the particular builder’s risk insurance policy, insurer and available coverage extensions, cover may potentially address things such as:
- buildings under construction
- construction materials
- equipment
- temporary structures
- theft
- certain natural disasters
- accidental physical damage
- mechanical breakdowns
- debris removal
- liability coverage.
Policies vary considerably, however.
Some policies exclude defective workmanship, employee theft, flood insurance, earth movement or particular types of equipment unless additional coverage is purchased.
This is why reading the fine print matters.
What Are Soft Costs?
Some construction insurance policies can also include or offer protection for soft costs.
These are expenses associated with a delay to the construction project rather than the cost of repairing the physical structure itself.
Examples might include certain:
- architect fees
- professional fees
- additional financing costs
- permit-related expenses
- legal expenses
- additional interest
- property taxes
- project administration expenses.
Whether these costs are insured will depend entirely upon the policy.
Never assume that because physical damage is covered, every financial consequence of that damage is covered too.
Does Domestic Building Cover Include Liability Insurance?
Not necessarily.
Liability insurance and warranty-style building protection perform different jobs.
A general liability policy, for example, could protect a builder or contractor where another person suffers injury or property damage for which the insured business is legally liable.
Warranty-style insurance focuses instead on particular problems with the domestic building work.
A homeowner planning a substantial project may therefore need several different insurance policies operating alongside each other.
The right insurance depends on who is carrying out the work, what is being built and the different risks involved.
What Doesn’t Domestic Building Cover Protect Against?
The answer depends on the actual policy or scheme.
Domestic building protection should never be treated as unlimited insurance against everything that might go wrong with a house.
Potential exclusions or limitations can relate to:
- minor cosmetic issues
- work outside the insured contract
- unapproved variations
- work by an unregistered builder where registration is required
- defects already disclosed in certain circumstances
- losses outside relevant claim periods
- claims exceeding policy limits.
Under Victoria’s current Home Warranty system, for example, minor cosmetic differences between completed work and the contract plans and specifications aren’t necessarily covered.
The safest approach is to check the actual insurance documents rather than relying solely on a general explanation.
How Much Coverage Do You Need?
There isn’t one answer to the question of how much coverage every building project needs.
Consider:
- the total contract value
- rebuilding costs
- materials stored on site
- existing structures
- temporary structures
- equipment
- potential accommodation costs
- demolition and debris removal
- professional fees
- liability risks
- the value of the completed property.
You should also check whether the sum insured automatically increases if construction prices rise.
Don’t simply compare current prices between insurance companies. A cheaper policy isn’t necessarily better if it leaves important coverage gaps.
The right policy is the one offering suitable protection for your circumstances at a reasonable price.
How Much Does Builder’s Risk Insurance Cost?
Builder’s risk insurance costs vary substantially.
The insurance provider may consider factors such as:
- construction cost
- project location
- building materials
- length of the project
- type of construction
- previous insurance claims
- security at the construction site
- value of equipment and materials
- required type of coverage.
State Farm, for example, notes that factors such as property value, location and construction materials can affect builder’s risk pricing.
For that reason, compare both price and insurance coverage rather than simply choosing the lowest quote.
What Should You Check Before Building Work Starts?
Your first step should be establishing which insurance requirements apply to your location and construction project.
Before signing a contract or making substantial payments:
- Check the builder’s registration.
Make sure any registered builder requirement has been satisfied. - Read the written contract.
Understand exactly which work is included and who is responsible for insurance. - Check insurance documentation.
Ask for the relevant certificate, Notice of Cover or copy of the policy where appropriate. - Check the building permit.
Confirm required approvals are in place. - Contact your existing insurer.
Tell your home insurance provider about major building work before it begins. - Understand exclusions.
Read any policy wording, Product Disclosure Statement and related insurance documents carefully. - Check excesses and claim periods.
Know how much you would have to contribute towards an insurance claim and how quickly a problem must be reported. - Keep records.
Save photographs, invoices, contracts, variations, payment records and correspondence. - Arrange inspections where appropriate.
An independent professional such as Jim’s Building Inspections or another suitably qualified inspector may be able to produce an inspection report documenting concerns. Jim’s Building Inspections, for example, offers insurance assessments that document property damage and repair requirements. - Get professional advice for complicated projects.
A construction lawyer, insurance specialist or suitably qualified professional can help where substantial sums or complicated contractual obligations are involved.
Check the Policy, Not Just the Marketing
Insurance companies use different terminology.
One insurer might describe a product as a builders risk policy while another refers to course of construction insurance. Australian documents may contain a Product Disclosure Statement, while some financial products may also be accompanied by Target Market Determinations.
The product name alone doesn’t tell you whether your particular risk is covered.
Look at:
- insured events
- exclusions
- excesses
- maximum claim amounts
- coverage extensions
- liability cover
- definitions of defective work
- start and end dates
- geographical restrictions
- claim notification requirements.
If you heard about a particular type of building insurance on TikTok, make sure you check the actual policy wording before relying on it. Social media can be useful for discovering a subject, but it isn’t a substitute for a contract or insurance document.
What Happens If Your Builder Goes Insolvent?
This is one of the circumstances where existing Victorian DBI policies can become particularly important.
Under the old scheme, builder insolvency is one of the events that can trigger an eligible DBI claim. Builder death or disappearance can also be triggers.
If your project is covered by the new Home Warranty scheme, the process is different because the scheme can potentially respond to eligible incomplete, defective or non-compliant work where a builder is unable or unwilling to resolve it.
If a builder becomes insolvent during a substantial project, contact the relevant insurance provider or regulator promptly and consider obtaining legal advice before appointing another builder or carrying out significant remedial work.
Can You Claim for Defective Building Work?
Potentially, but eligibility depends on the scheme or insurance policy.
Existing DBI policies can provide cover for eligible defective or incomplete work once the required policy trigger has occurred.
Victoria’s new Home Warranty system provides broader access to assistance for eligible incomplete, defective or non-compliant building work.
Evidence can be extremely important.
Keep photographs and consider obtaining a professional inspection report documenting:
- what is defective
- where the defect is located
- whether it appears structural or non-structural
- remedial work required
- estimated repair costs.
Don’t demolish or repair important evidence before checking what your insurer requires unless emergency work is necessary to prevent further property damage.
Is Domestic Building Cover a Legal Requirement?
In Victoria, eligible domestic building work is subject to statutory insurance requirements.
For new eligible contracts signed from 1 July 2026, the current system is Home Warranty, with registered builders responsible for paying the premium for eligible projects.
Existing DBI policies continue to operate for older insured work.
The exact requirements can depend on:
- when the contract was signed
- project value
- type of building
- builder registration
- whether you are an owner-builder
- whether the property is being sold.
This is one reason older articles referring solely to the previous A$16,000 threshold can now be misleading.
Buying a Home That Has Recently Had Building Work
If you are buying relatively new real estate, don’t just look at the decoration and finished surfaces.
Ask whether significant domestic building work has been carried out and obtain relevant documentation.
In Victoria, eligible homeowners and prospective purchasers can request an Insurance Information Statement relating to Home Warranty work where the BPC issued a Notice of Cover from 1 July 2026 onwards.
For owner-builder properties, pay particular attention to the required defects documentation and insurance arrangements.
A few checks before purchase could potentially prevent substantial problems later and help protect both your investment and the property for future generations.
Frequently Asked Questions
Is domestic building insurance the same as buildings insurance?
No.
Victorian DBI relates to eligible domestic construction work and particular building defects or incomplete work. UK buildings insurance mainly protects the physical structure against insured events such as fire, storm, flood and escape of water.
Does DBI cover personal belongings?
Generally, personal belongings are a separate issue.
In the UK, you would normally need contents insurance to protect furniture, clothing, jewellery and other possessions.
Does normal home insurance cover defective workmanship?
Not necessarily.
Standard home insurance generally focuses on damage caused by covered events. The cost of correcting faulty workmanship or a construction defect may require a different warranty or insurance product.
Check your individual policy carefully.
What happens to old Victorian DBI policies after July 2026?
They remain in force under the existing Domestic Building Insurance scheme. They do not automatically transfer into the new Home Warranty scheme.
What replaced DBI in Victoria?
Home Warranty insurance replaced DBI for eligible new domestic building work from 1 July 2026.
What is the new Home Warranty limit?
The Victorian Building and Plumbing Commission states that Home Warranty may provide up to A$400,000 in total assistance per home, subject to eligibility, limits and exclusions.
How long can building defects be covered?
Under Victoria’s new Home Warranty system, major defects may be covered for up to six years after eligible work is completed, while other defects or non-compliant work may be covered for up to two years. Existing DBI policies have their own terms and claim conditions.
So, What Is Domestic Building Insurance?
Ultimately, what is domestic building insurance depends partly on when and where the building work took place.
For Victorian homeowners with existing policies, DBI remains an important form of financial protection against eligible defective or incomplete domestic building work when specified policy triggers occur.
For eligible new Victorian contracts from 1 July 2026, however, the relevant protection is now the state’s Home Warranty scheme rather than the previous DBI scheme.
UK property owners should be careful not to confuse the Australian terminology with ordinary UK buildings insurance. A major renovation or new construction project can involve several separate forms of protection, potentially including home insurance, structural warranties, contract works insurance and liability insurance.
Whichever system applies, the best way to protect yourself is to check the builder, understand the written contract, verify the insurance before work begins and read the fine print carefully. Building projects involve significant sums of money, and identifying coverage gaps before construction starts is considerably easier than discovering them after something has gone wrong.
