Victorian Domestic Building Insurance changes - Past, Present, Future 04/09/2017
Domestic Building Insurance (DBI, also known as Home Warranty Insurance) in Victoria has changed significantly over the past few years, with the landscape again recently changing, and for the better. In 2010 the numerous private insurers in the market all exited in quick succession, citing profitability concerns caused by escalating claims cost and frequency. The Victorian government promptly stepped into the void and established the government backed VMIA program, which was managed by QBE for several years up until June 30, 2017.
On July 1, 2017, the VMIA introduced several changes to DBI, launching the new ‘BuildVic’ portal, streamlining the DBI model by removing QBE and appointing MBA Insurance Services as one of six ‘Panel Distributors’ allowing us to provide members with direct access to VMIA, via MBAIS. DBI rates sharply reduced with the change, with costs reducing anywhere from 25% - 35% for DBI job specific policies.
Two months down the track and the introduction of BuildVic has been very well received, with builders now able to transact DBI themselves, enabling members to immediately obtain job specific DBI certificates, in a matter of minutes. While MBAIS still manually transacts DBI for many of our clients, a much higher than expected number are already comfortable using BuildVic themselves, with the system easy to use and available 24 hours a day, 7 days a week. BuildVic also allows builders to obtain copies of their Letter of Eligibility at any time, while also outlining available limits, ensuring you can easily access up to date information.
Another benefit of the recent changes is the allowance for completed jobs to be restored to your available limit. While this is only for jobs being put through after July 1 2017, this should allow builders to complete more work, as the annual limit has changed to an ‘open job’ limit. For example, a builder with a $5m limit, with an average build time of 9 months, now has the capacity to do more than $5m in a 12 month period, as completed jobs will refresh the limit throughout the year – allowing potentially $5.5m, or $6m worth of work to be completed over a 12 month period.
Having now transacted DBI under the new system for two months – we’ve compiled a few frequently asked questions & responses:
Q: I’m having trouble logging into BuildVic/BuildVic isn’t working properly?
A: The preferred browser for BuildVic is Google Chrome, and unfortunately it may not function correctly with other browsers.
Q. The new letter of eligibility does not state policy number, what do I write in the registration renewal form?
A. The new letter of eligibility states builder account number instead of policy number. You can put down this number on the application form instead of policy number.
Q. What is the commencement date and expiry date for my letter of eligibility (policy)?
A. Technically speaking, there is no commencement and expiry date. The policy itself is considered perpetual since the initial approval/inception of policy, however for the formality of the procedure please put down the “date issued” date on the letter of eligibility for commencement date and a year from the “date issued” date for expiry date on the registration renewal application.
Q. VBA has requested an up to date letter of eligibility that is within a 4 month period from the registration expiry date, however the supplied letter of eligibility is outside of the specified period.
A. Unfortunately we cannot provide a letter of eligibility that is future-dated, please contact us when it is within 4 months period from your registration expiry date.
Q. I need to renew my commercial building registration, can I get a letter of eligibility or certificate of currency?
A. The letter of eligibility is only applicable to domestic (residential) builders licences and a certificate of currency is no longer required as VBA has decided to remove the insurance requirement for commercial building registration. If you wish to renew your commercial building registration, please fill out the renewal form and make the payment for applicable fees to VBA.
Q When do my limits replenish?
A: Your total construction limit no longer replenishes on an annual basis and has moved to a job on/job off rolling limit, or open job limit, with your limits reviewed periodically by VMIA. Should you need a limit increase at any stage, MBAIS can assist you through this process free of charge.
Q: When do I need to notify the VMIA of a contract value increase?
A: Variations only need to be submitted if the contract price varies by no more than 10%. The variation will be automatically covered, however if the homeowner requests that the amounts must exactly match, then the VMIA will accommodate.
Q: Will a defects report be required when submitting a takeover application?
A: The VMIA will assess a takeover without a defects report, but we recommend that the builder obtain an independent report and document the current stage of works.
Q: How do I appoint MBAIS as my DBI Distributor?
A: Visit our DBI website www.domesticbuildinginsurance.com.au, click on the Appoint MBAIS as your DBI Distributor link, complete the VMIA Distributor Nomination Form and return it to the VMIA (address provided on the form).
As always, MBAIS is here to help, through managing Eligibility limit reviews and increases, troubleshooting and assisting you to use BuildVic, or simply transacting on your behalf. If you need any help at all, please don’t hesitate to contact us or visit our designated DBI website to understanding more.