Domestic Building Insurance Hike
Domestic Building Insurance premium hike will damage the building industry.
Starting September 1, 2023, there will be a substantial 43 percent rise in premiums for Domestic Building Insurance (DBI). Regrettably, this added expense will be passed on to clients without offering any additional benefits to them.
The augmented premium will pose a challenge for builders, especially those grappling with delays in the processing of applications and cancellations by VMIA (Victorian Managed Insurance Authority).
Over time, there has been mounting pressure on premiums due to the increasing number of builder insolvencies in recent years. However, the magnitude of this uniform increase, effective from September 1, is unjust and unprecedented. This premium surge is particularly disadvantageous considering the ongoing rise in material and labor costs faced by the building industry.
The majority of Victorian builders are not triggering DBI claims. They are not undergoing liquidation, failing to adhere to Court or Tribunal Orders, or becoming unavailable to fulfill their commitments. Despite the existing challenges, builders are persevering in completing homes for their clients.
The Victorian government has previously declared its intent to evaluate the Domestic Building Insurance scheme. Simultaneously, they are in the process of reviewing the Domestic Building Contract Act, which incorporates legal restrictions contributing significantly to the current financial hardships experienced by builders.
It would have been prudent for any increase in DBI premiums to await the outcome of this comprehensive review.