The Role of VMIA in Builders Warranty
Builders Warranty Insurance (BWI) schemes (or Guarantee Schemes) for the housing industry in Victoria began during the early 1970's. At first, they were voluntary schemes but in 1984 the Victorian Government legislated to require all builders to provide a six-year guarantee on every house they built.
In general, BWI provides mandatory protection for homeowners where:
- Your contracted builder fails to complete the construction of your new house or an extension or renovation to your existing property.
- For a period of 6 years after completion, you are protected against the cost of defects occurring in the job if the defects are caused by the builder’s workmanship.
For the period July 1984 to April 1996, Housing Guarantee Fund Ltd (HGF) administered the BWI under both the Local Government Act and the House Contract Guarantee Act 1987. The warranty period on HGF BWI expired in November 2003; therefore HGF claims are no longer accepted under the above legislation.
In May 1996, the Domestic Building Contracts Act 1995 superseded the House Contracts Guarantee Act 1987. The main changes were:
- Replacing the guarantee scheme, BWI policies were now issued by private insurance companies,
- the Victorian Civil and Administrative Tribunal (VCAT) was empowered to resolve domestic building contract disputes that could not be resolved between the owner, the builder and the insurer.
Since 1996, two companies in the HIH group were major insurers of BWI in Victoria. However, in March 2001, the HIH group of companies went into liquidation. The Victorian Government responded to minimise the effect of the collapse on builders' warranty by enacting the House Contracts Guarantee (HIH) Act 2001. The key points of this legislation were:
- the Government will protect home owners with HIH or FAI BWI by meeting claims,
- HGF was authorised to administer these claims on the government's behalf.
In October, 2005, the Victorian Government again responded to the collapse of another BWI insurer (Homesafe Equities Pty Ltd) that went into liquidation in April 2004. The Government instructed Victorian Managed Insurance Authority (VMIA) to provide indemnity cover for the Homesafe BWI policy holders.
On 1st February, 2006, HGF was merged into VMIA and the Builders Warranty Program (BWP) was commenced. The BWP now provides equivalent protection for homeowners who hold FAI, HIH or Homesafe BWI policies.
For any home owner whose house is covered by any of the above BWI policies and who believes that they may have a claim for completion or repair of defects, please download and submit the relevant claim form to us.
