For Victorian domestic building work over $16,000, Consumer Affairs Victoria’s owner-builder guidance, updated 30 June 2025, says an owner-builder must take out domestic building insurance to protect a property buyer and must cover their own work rather than rely on a registered building practitioner’s policy. Under that guidance, non-structural defects are covered for two years and structural and other defects for six years; the buyer can use the cover only if the owner-builder dies, becomes insolvent or disappears. Figures checked 1 October 2026.
What makes someone an owner-builder in Victoria?
Consumer Affairs Victoria says a person is an owner-builder if they intend to:
| Basis | What this means |
|---|---|
| Using their own skills | Building, extending or renovating their home personally |
| Managing subcontractors | Intending to manage tradespeople who will carry out the work |
| Being a registered builder | Building, extending or renovating a home on their own property |
Owner-builder status brings many of the responsibilities and financial risks associated with being a registered builder. Most laws applying to registered builders also apply to owner-builders. Their rights and responsibilities are governed by the Domestic Building Contracts Act 1995 and the Building Act 1993.
The owner-builder is responsible for:
- Doing all or part of the work personally, except work that must be performed by licensed tradespeople.
- Contracting out work and checking that tradespeople are registered and licensed where required.
- Arranging insurance.
- Managing the occupational health and safety of workers.
- Obtaining permits, organising inspections and ensuring the work complies with building regulations, standards and other laws.
- Taking responsibility for the work and its finances.
An owner-builder may engage a building consultant for independent advice during construction. The consultant can check the quality of both the owner-builder’s work and the work of other people they engage.
What does the $16,000 insurance threshold mean?
For domestic building work over $16,000, two insurance responsibilities must be distinguished.
First, the owner-builder must take out domestic building insurance to protect the person who buys the property. This cover responds if the owner-builder dies, becomes insolvent or disappears.
Second, the owner-builder must cover their own work. Even where a registered building practitioner carried out work under a major domestic building contract and that work should be covered by the practitioner’s insurance, Consumer Affairs Victoria says the owner-builder also needs their own domestic building insurance for their work.
The guidance states the following coverage terms:
| Feature | Consumer Affairs Victoria guidance |
|---|---|
| Non-structural defects | Covered for two years |
| Structural defects | Covered for six years |
| Other defects | Covered for six years |
| Cost limit | Up to $300,000 toward fixing structural and non-structural defects |
| Start of buyer cover | Once the contract of sale is signed |
| End of insurance protection | After six years, the property is no longer covered by domestic building insurance |
A buyer cannot use the insurance simply because a defect appears. The policy can be used only in the specified circumstances involving the owner-builder’s death, insolvency or disappearance. It also does not cover defects or incomplete work identified in the defects inspection report.
To obtain insurance, ask the provider what documents it requires. The guidance identifies the following:
- The defects report.
- Domestic building insurance certificates supplied by builders or tradespeople working on the project.
Why do contracts still matter?
Domestic building insurance does not replace the need for a written contract or other legal obligations.
Even if the owner-builder has signed the building permit, the owner and a builder, contractor or tradesperson must enter into a written contract for domestic building work more than $10,000. Before the owner-builder signs a major domestic building contract, the builder must provide a copy of the Domestic Building Consumer Guide.
Consumer Affairs Victoria recommends entering into major domestic building contracts with builders and tradespeople for work over $10,000. It also recommends using registered builders for work over $10,000, or to reblock, restump, demolish or remove a home regardless of the work’s value.
The permit signature should be checked carefully. Consumer Affairs Victoria warns against signing as the owner-builder when a builder or tradesperson intends to do the work. It says this is risky and may cost more than expected, and that the person may be unregistered or trying to avoid their legal responsibilities. Advice should be sought before agreeing to take that role.
What permits and trade checks are required?
The $16,000 figure also applies to a separate consent requirement. Before carrying out domestic building work over $16,000, an owner-builder must obtain a certificate of consent from the Building and Plumbing Commission.
Owner-builders must also:
- Obtain relevant planning permits from the local council.
- Be named as the owner-builder on permits.
- Engage a building surveyor to obtain building permits, including an occupancy permit or certificate of final inspection when the work is completed.
- Arrange legally required inspections at the appropriate stages.
- Ensure the work meets building regulations, standards and other laws.
When contracting tradespeople, the owner-builder must check that they are registered and licensed where required. Consumer Affairs Victoria recommends always using licensed electricians, plumbers and asbestos removalists when asbestos removal is required.
These checks remain important even when insurance is arranged. Insurance is not a substitute for compliant permits, appropriate contracts or properly authorised tradespeople.
What happens when an owner-built property is sold?
If an owner-builder sells the property within six years and six months after completing the building work, they must provide a defects inspection report that:
- Is no more than six months old.
- Comes from a registered building practitioner.
- Covers all work regardless of value.
- Includes extensions, renovations, garages and verandas.
The insurance becomes effective once the contract of sale is signed. The buyer may use it only if the owner-builder has died, become insolvent or disappeared.
This distinction matters because domestic building insurance does not cover defects or incomplete work identified in the defects inspection report. Consumer Affairs Victoria also states that warranties still apply.
What should be checked before relying on the insurance?
This is general information, not financial or legal advice. Check the Consumer Affairs Victoria owner-builder page for the current requirements and read the policy’s Product Disclosure Statement for its coverage terms, conditions and exclusions.
Sources
FAQ
Does the $16,000 rule mean a tradesperson’s policy covers the owner-builder’s work?
No. If a registered building practitioner carried out the work under a major domestic building contract, it should be covered by the practitioner’s domestic building insurance. The owner-builder must still have their own domestic building insurance to cover their own work.
Does signing the building permit remove the requirement for a written contract?
No. Even if you signed as the owner-builder on the building permit, a written contract is required for domestic building work more than $10,000.
Can a buyer claim for every defect for six years?
No. Non-structural defects are covered for two years, while structural and other defects are covered for six years. The buyer may use the insurance only if the owner-builder dies, becomes insolvent or disappears, and identified defects or incomplete work in the defects inspection report are not covered.
What report is required when selling within six years and six months?
The owner-builder must provide a defects inspection report no more than six months old from a registered building practitioner. It must cover all work, including extensions, renovations, garages and verandas, regardless of the work’s value.
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