Builders warranty insurance exemptions in Victoria

The scheme changed on 1 July 2026

The insurance that sits behind Victorian domestic building work changed on 1 July 2026. Domestic Building Insurance (DBI) was replaced by a first-resort Home Warranty scheme for new work and the private DBI market closed. Which scheme applies, and therefore which exemptions apply, depends on when the building contract was signed.

• Contracts signed on or after 1 July 2026 fall under Home Warranty. It is mandatory for eligible domestic building work valued at more than $20,000 on buildings up to three storeys, and the Building and Plumbing Commission (BPC) is the sole provider. Its legal base is Part 9A of the Building Act 1993 (Vic), inserted by the Building Legislation Amendment (Buyer Protections) Act 2025, together with the Building (Statutory Insurance Scheme) Regulations 2026.
• Contracts signed before 1 July 2026 stay under DBI, governed by the Domestic Building Insurance Ministerial Order made under section 135 of the Building Act 1993 (Vic). DBI is now issued by the BPC, which took the function over from the Victorian Managed Insurance Authority (VMIA) on 1 July 2025. Existing DBI policies continue on their terms.

The exemption logic below is common to both schemes, with the contract-value line moving from more than $16,000 under DBI to more than $20,000 under Home Warranty.

What the insurance is

The insurance is the last-resort (DBI) or first-resort (Home Warranty) cover that protects a Victorian homeowner where the registered builder cannot or will not complete or fix the work. A builder who takes payment under a major domestic building contract without holding the required cover faces penalties exceeding $46,000 for an individual and $480,000 for a company. The exemptions matter because they define the projects where a builder does not need to issue a Certificate of Insurance or Notice of Cover and is not exposed to that penalty.

The contract-value exemption

Cover is required only above the contract-value line. Below it the work is exempt.

• Under DBI (contracts before 1 July 2026): the line is more than $16,000. A $14,000 bathroom renovation is exempt.
• Under Home Warranty (contracts on or after 1 July 2026): the line is more than $20,000. Work valued at $20,000 or less is exempt.

The line applies to the total contract price, not the value of any single trade item. Parties cannot split a $25,000 kitchen renovation into a $13,000 cabinetry contract and a $12,000 tiling contract to duck the requirement. Consumer Affairs Victoria treats artificial contract splitting as a single composite contract and applies the threshold to the aggregate. Under Home Warranty the value is worked out on a defined method, being an estimate of labour and materials plus GST, less chattels and excluded items, so an owner-builder's own labour counts towards the $20,000.

The multi-storey exemption

Neither scheme covers taller apartment buildings. DBI did not apply to residential buildings containing more than three storeys of accommodation, set out in Practice Note PN-01 issued by the Victorian Building Authority. Home Warranty carries the same boundary across, applying to residential buildings up to three storeys that contain more than two homes and excluding residential buildings that are more than three storeys and contain more than two homes.

The boundary is precise. A rise in storeys of three with three Class 2 storeys is inside the scheme. A rise in storeys of four with four Class 2 storeys is outside it. An entrance foyer and storage area count as accommodation even where the rest of the floor is given over to carparking. The exemption attaches to the building as a whole, not to individual units, so a builder contracting for a single apartment in a five storey block is exempt regardless of the contract value.

Why the multi-storey carve-out exists

The carve-out treats larger Class 2 buildings as commercial-grade risk that sits outside the consumer protection model the scheme was built to deliver. Owners corporations in higher-rise buildings rely on the implied warranties under section 8 of the Domestic Building Contracts Act 1995 and the warranty rights transferred to successor purchasers under section 9. The State cladding rectification program picks up the catastrophic failure cases the scheme would otherwise have needed to absorb.

Other categories outside cover

The insurance is not required for work carried out by an owner-builder on their own home while they hold it, for work performed by the consumer on their own home, for repairs and maintenance under the contract-value line or for fences, retaining walls and similar work where the value sits below the line or the work falls outside the definition of domestic building work. Plumbing work is covered by a separate compliance-certificate regime and does not attract this insurance even where the contract value exceeds the threshold. Home Warranty also does not protect a homeowner who engages an unregistered builder for work that must be done by a registered builder.

The owner-builder position is different on resale. An owner-builder who sells within six years and six months of completion must hold the required statutory insurance for the work under section 137B of the Building Act 1993 (Vic), and from 1 July 2026 that owner-builder cover is drawn from the same first-resort scheme for work done under a certificate of consent. That rule sits in the section-137b-owner-builder-resale-vic entry.

A new dwelling contract above the threshold always requires cover regardless of trade composition. A renovation contract above the threshold to an existing single dwelling requires cover in the same way. A renovation contract to a unit inside a building of more than three storeys containing more than two homes is exempt because the multi-storey rule overrides the contract-value line.

TradeLens compliance signal

The exemption framework is one of the highest risk patterns in the platform. Builders who misread the multi-storey exemption commonly take a deposit on a contract that legally required cover. Builders who rely on the contract-value line for a renovation that grows through variations above the line create the same exposure where the original certificate or notice of cover was never issued. The move from the $16,000 DBI line to the $20,000 Home Warranty line on 1 July 2026 is itself a trap for any quote or template that still cites the old figure. TradeLens compares the live contract value against the current threshold and the building classification against the exemption matrix on every project update.