Section 137B Report vs Domestic Building Insurance: What’s the Difference?

At a glance: Section 137B report, DBI and Home Warranty

Important: the Home Warranty rules for new building contracts should not be assumed to apply unchanged to every owner-builder resale. The owner-builder insurance requirements and transitional rules need separate confirmation.

1. What is a Section 137B defects inspection report?

Section 137B of the Building Act 1993 (Vic) deals with selling owner-built homes within the prescribed period. Where it applies, the owner-builder must obtain a defects report from a prescribed building practitioner no more than 6 months before the contract, give the buyer a copy, and provide any required insurance certificate.

The Building and Plumbing Commission says the report must list all defective or non-compliant work, include detailed photos, be no older than six months and be given to the buyer.

A 137B inspection is not:

• a building permit;
• a Certificate of Final Inspection or Occupancy Permit;
• a structural engineer’s certification;
• a warranty that hidden building elements comply; or
• a buyer’s pre-purchase building and pest inspection.

Its role is to document findings. It is not an approval process.

2. What is Domestic Building Insurance (DBI)?

Domestic Building Insurance is the earlier Victorian scheme, and it still applies to work and policies covered under it. Consumer Affairs Victoria says DBI covers you if your builder dies, is insolvent or disappears, for repair costs up to $300,000, with cover for structural faults for 6 years and non-structural faults for 2 years, subject to the policy.

Existing DBI does not convert to Home Warranty. The Building and Plumbing Commission says existing cover continues under the DBI scheme. A buyer should check the actual policy, insurer, insured work, dates and exclusions.

3. What changed on 1 July 2026? Home Warranty

Home Warranty applies to new eligible domestic building work under contracts signed on or after 1 July 2026. Official guidance says it may apply to eligible work valued at more than $20,000 on homes of up to three storeys, with up to $400,000 in total assistance per home, subject to limits and exclusions.

Unlike DBI, Home Warranty can help with eligible incomplete, defective or non-compliant work under the scheme rules, without the builder having died, disappeared or become insolvent.

However, do not apply the contract-based Home Warranty rules mechanically to an owner-builder resale. The Building and Plumbing Commission’s owner-builder sale page currently describes both DBI (for projects over $20,000) and Home Warranty with a Notice of Cover, without clearly separating them by date. Your conveyancer should confirm which applies to your work and when it must be obtained. Where to buy it: Owner-builder insurance when selling in Victoria.

4. If I have a Section 137B report, am I automatically insured?

No. A completed report does not mean an insurance policy has been bought or issued.

A seller should ask their conveyancer whether insurance is required for the owner-builder work and what evidence must be provided before the contract. A buyer should ask for the actual certificate of insurance or Notice of Cover and check that the work, property and dates match.

Equally, an insurance certificate does not replace a required Section 137B report.

5. Can a Section 137B report affect insurance cover?

Yes. The Building and Plumbing Commission says defective or non-compliant work listed in the defects inspection report will be excluded from the policy, because the buyer knows about it at the time of purchase. How that works for a particular policy should be confirmed.

Example (hypothetical): waterproofing

An owner-builder renovated a bathroom before selling. The inspector finds signs of defective waterproofing and records them in the report. The buyer is now on notice of that condition, and should not assume it will be covered just because an insurance document is also supplied. The buyer may want independent advice on the condition, the repair cost and the insurance position before deciding how to proceed.

Defects must be recorded accurately. A report should never be softened to make an insurance claim or a sale easier.

6. Does insurance replace an independent pre-purchase inspection?

No. There are three separate things:

1. Section 137B report: inspection and disclosure of the owner-builder work, where required.
2. Insurance: financial protection for eligible, covered losses under the policy or scheme.
3. Buyer’s pre-purchase inspection: an independent look at the wider property, beyond the owner-builder scope.

7. What should conveyancers check before the sale?

• Scope: what work was done, where and by whom?
• Responsibility: owner-builder work, a registered builder, or another arrangement? See renovations done by licensed trades.
• Dates: when was the work completed, and what supports that date?
• Approvals: building permits, Occupancy Permits or Certificates of Final Inspection where required. See work without permits or certificates.
• Report: is a Section 137B report required, by a prescribed practitioner, and within six months of the contract?
• Insurance: is there a DBI certificate or Home Warranty Notice of Cover, as applicable, for the right work?
• Disclosure: have the documents and listed defects been considered for the contract and Section 32?
• Timing: were the documents obtained and given at the required stage, before the contract where applicable?

Six years or six and a half?

The Act generally uses 6 years and 6 months from the completion date for domestic building work. Some current Building and Plumbing Commission wording refers to 6 years. Do not rely on a generic number; your conveyancer should confirm the period, the completion date and any transitional rules. More for practitioners: Section 137B for solicitors and conveyancers.

8. What if the report or the insurance is missing?

First, do not treat the two as interchangeable. A sensible sequence:

1. Gather the renovation scope, dates, approvals and trade or builder records.
2. Ask the conveyancer which report and insurance obligations apply.
3. If a Section 137B report is required, arrange an inspection with a prescribed practitioner.
4. If insurance is required, obtain the right policy or Notice of Cover through the proper process.
5. Have the conveyancer review the whole package before the contract stage.

If the contract is already signed, get case-specific legal advice. See Missing Section 137B report after signing a contract.

9. How a building inspector can help

Owner Builder Inspection Melbourne carries out Section 137B owner-builder defects inspections across Melbourne. We identify the owner-builder work to be inspected, carry out the inspection and document the defects and non-compliant work we find, with photos.

We do not issue insurance or Home Warranty cover, give retrospective approvals, or decide whether a vendor statement is legally sufficient. Insurance eligibility and cover should be confirmed with the Building and Plumbing Commission or insurer, and the contract position with your conveyancer or solicitor.

Related: Section 137B and renovations without a building permit.

Frequently asked questions

Sources (checked 10 October 2026): Building and Plumbing Commission — Selling an owner-built home, Building and Plumbing Commission — Home Warranty, Consumer Affairs Victoria — Domestic building insurance and insolvency, Consumer Affairs Victoria — Owner builders checklist and Building Act 1993 (Vic), s 137B. Diagrams: original illustrations.

General information only, not legal or insurance advice. Requirements, transitional arrangements, eligibility and policy exclusions must be confirmed for the property and the sale. Owner Builder Inspection Melbourne is not an insurer, conveyancer, building surveyor or approval authority. Last reviewed: 10 October 2026.