The Victorian Managed Insurance Authority (VMIA) has announced significant changes to Domestic Building Insurance (DBI) premiums, set to take effect on 6 August 2024. These adjustments are crucial for homeowners, builders, and tradespeople across Victoria, especially those involved in renovations, house extensions, and new building projects. Here is a detailed look at the upcoming premium increases and what they mean for you.
Why Are Domestic Building Insurance Premiums Increasing?
The VMIA has cited several reasons for the substantial rise in DBI premiums. A record number of Victorians have received DBI settlements over the past 12 months to finish their new homes. Since 1 July 2023, VMIA has resolved over 4,000 DBI claims and has made record claims payments due to the compounding factors of builder insolvencies, high inflation and skilled worker shortages, all of which impact build costs. These factors have significantly driven up building costs, necessitating an increase in premiums to ensure continued protection for homeowners.
Details of the Premium Increases
From 6 August 2024, DBI premiums will see an average increase of 53%. However, the extent of the rise varies based on the type of construction or renovation project:
- New Single Dwellings and Multi-Unit Dwellings: Premiums will increase by 65%.
- Structural Renovations, Non-Structural Renovations, and Swimming Pools: Premiums will increase by 20%.
- Owner-Builders: Premiums will increase by 65%.
These adjustments are essential to maintain the financial stability of the DBI system and to continue providing peace of mind to customers of builders, especially in the current climate of uncertainty.
Impact on Homeowners and Builders
For homeowners in Melbourne and across Victoria, this premium increase underscores the importance of timely and adequate insurance coverage. Whether you’re planning house renovations or new buildings, understanding the new premium rates is crucial for budgeting and financial planning.
For builders, particularly those specializing in house extensions and other renovation projects, these changes will necessitate a re-evaluation of project costs and insurance strategies. The increase in premiums also highlights the importance of maintaining high standards in construction and customer service to minimize the risk of claims.
How to Prepare for the New Premium Rates
The new DBI premiums will apply to all policies paid and issued on or after 6 August 2024. To ensure your application is processed under the current rates, it is essential to lodge it before 5 pm on 30 July 2024. Applications submitted after this time may not be processed before the new rates take effect.
Key Steps for Homeowners and Builders
Review Current Insurance Policies: Assess your current DBI coverage and understand how the new rates will affect your premiums.
Plan Ahead for Renovations and Extensions: If you’re planning structural or non-structural renovations, consider accelerating your plans to secure current rates.
Consult with Your Insurance Provider: For personalized advice and to ensure your application is processed in time, contact your DBI team.
The HIA Insurance Services DBI team can be reached at 1800 762 878 or via email at au.hiaisdbi@aon.com.
The upcoming increase in Domestic Building Insurance premiums in Victoria is a significant change that impacts homeowners, Melbourne builders, and tradespeople alike. By understanding the reasons behind the increase and preparing accordingly, you can navigate these changes effectively. For those in the building and renovation industry, staying informed and proactive will help mitigate the impact of these adjustments on your projects and financial planning.