VMIA’s domestic building insurance scheme worked for most – but some homeowners with complex claims suffered serious personal and financial hardship
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Tabled in Parliament today, the latest investigation report by Victorian Ombudsman Marlo Baragwanath – ‘We just want to finish our home’: Management of Domestic Building Insurance claims by VMIA – investigated how the Victorian Managed Insurance Authority (VMIA) managed domestic building insurance (DBI) claims, both before and after the collapse of Porter Davis Homes in March 2023.
“For most people, building or renovating a home is one of the biggest projects they will ever undertake. If their builder becomes insolvent during the process, it can have a profound and immediate impact on their lives, their finances and their wellbeing,” said Ms Baragwanath.
Referred to the Ombudsman by Parliament’s Legislative Council, the investigation looked into VMIA’s preparedness for builder insolvency, processes, timeliness, communication and dispute handling. The Ombudsman received 125 submissions and reviewed 260 complaints as well as 46 claims.
The investigation found that while VMIA’s management of the domestic building insurance scheme achieved a reasonable outcome for most homeowners, there were issues with its processes, communication and transparency – and that meant homeowners, especially some with complex claims, could not have confidence in the outcome of their claim.
“One homeowner described their experience as a ‘double catastrophe’ – first the collapse of their builder, and then their experience with VMIA,” said Ms Baragwanath. “Home ownership is an aspiration for many Victorians – so it’s critical that there are fair systems and processes in place to enable people to realise that ambition.”
While most Porter Davis homeowners didn’t experience unreasonable delays in claims processing, where there were significant delays, it resulted in serious personal and financial hardship for homeowners.
“What this investigation highlights is how important it is for homeowners to have access to domestic building insurance that protects and supports them,” Ms Baragwanath said. “Domestic building insurance is not a compensation or hardship fund – but it needs to be both fair and financially viable.”
The investigation also found that while VMIA’s dispute-handling processes and practices met its legislative obligations, they weren’t always fair and reasonable. “As a government body, VMIA should have exercised discretion within the bounds of its domestic building insurance policy to achieve fair and timely outcomes for homeowners,” said Ms Baragwanath.
The investigation made nine recommendations focused on improving processes for managing domestic building insurance, communication with homeowners and overall transparency of the system. The recommendations have been accepted in principle by the new Building and Plumbing Commission and by the Department of Transport and Planning.
For interview requests or further information:
Peter Davies – Manager, Strategic Communications
Phone 0409 936 235
Email
vomedia@ombudsman.vic.gov.au