The Building Legislation and Treasury Legislation (Tax Relief) Amendment Act 2026 (Vic) (“Act”) contains provisions which, once commenced, will recognise and regulate decennial insurance, also known as latent defects insurance, in Victoria.

Significantly, once the scheme comes into operation,¹  decennial insurance may be obtained by a developer instead of a developer bond, to satisfy their obligations under the new developer bond scheme.²

The Act contains a suite of amendments, including provisions establishing the new decennial insurance scheme. At a high level, the key aspects of the decennial insurance scheme are:

• Alternative to developer bonds: Developers who obtain decennial insurance may be exempt from the requirement to provide a developer bond under the developer bond scheme.
• Developer responsibility to obtain decennial insurance: Developers are responsible for obtaining decennial insurance. Failure to obtain either decennial insurance or provide a developer bond may attract significant penalties.³
• Prerequisite to occupancy permit: Obtaining decennial insurance or providing a developer bond must occur before an occupancy permit can be granted.
• Approval of decennial insurance product: The Building and Plumbing Commission (BPC) must approve a decennial insurance product before it can be offered under a policy that will exempt developers from obtaining a developer bond. There are certain requirements that must be met for approval to be obtained.
• Coverage for relevant defects: Among other requirements to be approved by the BPC, decennial insurance products must provide coverage for relevant defects, being defects attributable to:
  1. Non-compliant building work that has caused, or is likely to cause damage to the building or a risk of serious injury or death
  2. Defective design, defective or non-compliant building work or a defective building product or material, where the defect has caused or is likely to cause the building to be uninhabitable or unusable, destroyed or under a threat of collapse
  3. An unsafe building product or the use of an unsafe building product
  4. The installation of a vertical transportation product, if the use of that product in the building has caused or is likely to cause a risk of serious injury or death
• Novation to owners' corporation: To be approved by the BPC, a decennial insurance product must prospectively authorise the novation of the policy to the relevant owners' corporation once established.
• Insurer recovery rights and responsibility of officers of a responsible entity: An insurer can enforce the rights and remedies available to the owners' corporation and lot owners. Officers of the responsible entity or corporation who knew of, or consented to the act or omission giving rise to the relevant defect may be deemed jointly and severally liable.
• Extended coverage periods: Decennial insurance products must provide cover for defects discovered within 10 years from the date on which an occupancy permit is issued. This is materially longer than the developer bond scheme, which has an effective post-occupancy coverage period of approximately 21-24 months depending on the timing of the final inspection report.⁴

Given these recent changes, it is important for developers of residential apartment buildings, owners corporations and owners of apartments to be aware of their rights, obligations and involvement in the new developer bond and decennial insurance schemes.

If you would like further advice on the new developer bond scheme or the decennial insurance scheme, please contact the authors.

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¹ The decennial insurance provisions in Division 3 of Part 2 of the Act will come into operation on a date to be proclaimed. As at the date of this publication, no date has yet been proclaimed. If a date is not proclaimed earlier, the decennial insurance provisions will come into operation on 1 December 2027.

² The developer bond scheme was introduced by the Building Legislation Amendment (Buyer Protections) Act 2025 (Vic) and came into force on 1 July 2026. The scheme applies to the construction of residential apartment buildings of more than three storeys. Developers are exempt from the requirement to issue a developer bond if the building permit for the relevant building work is issued before 1 July 2027. This means the scheme will only apply to developers of buildings where the building permit is issued on and from 1 July 2027.

³ Penalties are up to 2500 penalty units for body corporates.

⁴ Claims may be made on the developer bond for rectifying reportable defective building work identified in the final inspection report, being reportable defective building work specified in the preliminary report that has not been rectified or reportable defective work building arising from the rectification of reportable defective building work specified in the preliminary report. As the final inspection report must be issued within 24 months of an occupancy permit being issued, this gives the developer bond scheme an effective coverage period of 24 months post-occupancy.