What if my builder has died, disappeared or become insolvent?

What is this resource?

If you have a dispute with a builder who has died, disappeared or become insolvent (bankrupt), you may be able to make a claim on their builder’s warranty insurance.

This fact sheet explains when you can make a claim on your builder’s warranty insurance and how to do it.  

What is builder’s warranty insurance? 

Builders in Victoria must take out domestic building insurance, also known as builder’s warranty insurance, for work valued at more than $16,000. This insurance provides cover to homeowners for incomplete or defective building work if their builder has died, disappeared or become insolvent. 

Who is the insurer?

If your policy was issued on or after 31 May 2010, the Victorian Managed Insurance Authority (VMIA) might be the insurer. You can check the details of your builder’s warranty insurance on the certificate of insurance or your building permit.  

If you do not have the certificate of insurance or your building permit, contact the VMIA on 03 9270 6900 or lodge an enquiry about your property and any relevant policies with the VMIA. 

If VMIA is the insurer, when can you make the claim? 

You can make a claim with VMIA if your building or renovation project has incomplete or defective works and your builder has died, disappeared or become insolvent (went bankrupt). 

If your policy was issued on or after 1 July 2015, you may also be able to make a claim if the builder doesn’t comply with a final order made by VCAT or a court. You will need to review the policy wording to confirm whether this is possible. If so, you should notify the insurance provider that proceedings are on foot when you commence proceedings.

How to find out if my builder is insolvent?

If you suspect your builder is insolvent, you should take the following steps: 

How can I find out if my builder has died? 

You can search obituaries, social media, or hire a private investigator. 

How can I confirm that my builder has disappeared? 

A builder is considered ‘disappeared’ if the builder cannot be found after you conducted reasonable searches and enquiries. Reasonable searches include trying to contact the builder, conducting searches and enquiring at the last known business address of the builder. Note that the VMIA will make further enquiries to confirm that the builder cannot be found. 

Note, only builders operating as sole traders or partnerships can disappear- companies cannot disappear.

How can I make a claim with VMIA? 

 Once you are satisfied that the builder has died, disappeared or become insolvent (bankrupt), you can lodge a VMIA claim online. You will need to have the following information ready:  

• Your builder’s insurance policy number (this will be certificate of insurance and building permit) 
• Copies of the builder’s invoices with receipts and bank statements as proof of payment  
• A list of defects and/or incomplete items you are claiming and the date the defects were first noticed 

What happens next? 

Once you submit your claim, VMIA will assess your claim by conducting searches and enquiries.   

 If VMIA finds that you are eligible to make a claim, VMIA will arrange a building consultant to visit your property and inspect the builder’s work.  

The building consultant will assess and report on each item you are claiming for. VMIA will then review the building consultant’s report and prepare a schedule of works which sets out all items that will be accepted under the policy. Once this is finalised, you may be asked to get at least one quote from a builder of your choice to complete or rectify the items in the schedule of works. Alternatively, the quote can be arranged by the VMIA. Once the VMIA has the quotes, they will decide what is a reasonable amount to pay to complete the incomplete works or rectify the defects. The VMIA will then pay a builder to complete or rectify the works. In some cases, the VMIA will pay this money to you directly. 

For more information, read VMIA’s claims process fact sheet. 

Are there any time limits for making a VMIA claim? 

Yes. 

A claim for structural building defects must be made within 6 years after the completion of work or termination of the building contract. 

A claim for non-structural building defects must be made within 2 years after the completion of work or termination of the building contract. 

You should act quickly, and if you are concerned that you may be out of time for making a VMIA claim,  seek legal advice. 

What if I’m not happy with VMIA’s decision? 

You can request a review of VMIA’s decision by making an application to VCAT within 28 days of the decision.