A private market insurance framework for residential apartment defects is one step closer to becoming law in Victoria, with the Building Legislation and Treasury Legislation (Tax Relief) Amendment Bill 2026 clearing the Legislative Assembly and advancing to the Legislative Council for further debate.
Resilience Insurance, a latent defects insurance provider operating in Australia since 2022, has publicly backed the legislation, noting its potential impact on how defect liability is managed in the apartment sector. The bill is expected to be debated and voted on in the upper house later this month.
If passed, the bill would require developers of residential apartment buildings of four or more storeys to arrange a 10-year insurance policy covering defects in major building elements before an occupancy permit is granted. The policy period runs from the date the occupancy permit is issued. The scheme is structured so that an owners corporation can file a claim directly with the insurer without first having to identify or pursue the party responsible for the defect. Should a claim be approved, the insurer organizes or funds the rectification work and retains the right to seek cost recovery from the responsible party afterward.
Before any decennial insurance product can be sold to developers, the designated insurer must receive approval from the Building and Plumbing Commission. The commission will also have oversight of policy notifications – developers must inform the commission when a policy is arranged or cancelled, and insurers carry the same obligation under Commonwealth insurance contract law. The commission can direct both developers and insurers to supply information about active policies. Where a claim is denied, the bill allows for regulations to be drafted that would establish a standardized dispute resolution process.
The bill introduces decennial insurance as an alternative option within the framework established by the Buyer Protections Act. That act currently requires developers of residential apartment buildings of four or more storeys to issue a bond before applying for an occupancy permit, with the funds held to cover the cost of rectifying defective work. Under the new bill, a decennial insurance policy would fulfill that requirement in place of the bond. The Victorian government has flagged that it intends to eventually replace the bond scheme with a mandatory decennial insurance requirement, contingent on the local market developing sufficient capacity. The bill draws on the structure of a comparable scheme introduced in New South Wales in 2022.
Resilience Insurance framed the bill’s lower house passage as evidence that legislative reform in this area can gain traction when grounded in industry practicalities rather than policy theory alone. “The Victorian Lower House vote shows that reforms like this succeed when they are practical, evidence-based, and supported by industry. Victoria is moving quickly on a reform that will make a real difference for apartment buyers while supporting better building outcomes and greater confidence in apartment delivery. This is step one. We look forward to the bill completing its passage through the Legislative Council and to working with government and industry to implement the framework effectively,” said Corey Nugent, CEO of Resilience Insurance.
The bill’s commencement is not immediate. The Victorian government has set a default start date of approximately 18 months after the bill’s introduction, citing the time needed to develop supporting regulations. Those regulations are expected to address technically complex matters related to both the decennial insurance framework and other elements of the bill and will involve consultation with industry stakeholders.
Beyond the insurance provisions, the bill addresses several other areas of building and tax law. These include changes to the Place of Public Entertainment permit scheme, amendments to the Security of Payment Act, new powers for building surveyors to act on condition-altered land, a ministerial power to designate flood-prone areas, adjustments to the emergency services and volunteers funding levy, and modifications to the land tax exemption applying to a principal place of residence under construction or renovation.
