The Victorian Government has passed legislation creating a developer-paid Strata Building Bond establishing much needed first level consumer protections for purchasers of new apartments in the state. Aligned to that legislation the government is progressing new regulation to allow developers to insure those new apartment projects with a 10-year Latent Defects Insurance (LDI) policy, Resilience LDI, instead of the traditional Strata Building Bond.

The move is part of a broader strategy to stimulate both supply and demand in the new apartment market. Recent government initiatives include removing stamp duty on new apartments until October 2026 and encouraging increased housing density around 50 key train and tram corridors.

This latest insurance reform is expected to boost buyer confidence in a market that has seen sluggish demand in recent years.

Resilience Insurance was the first provider to offer Latent Defects Insurance in Australia, with prominent Sydney developers such as Deicorp, Urban Property Group, and Abadeen already taking up the policy.

Corey Nugent, CEO of Resilience Insurance, says the new legislation is a significant step toward rebuilding trust in Victoria’s off-the-plan property market.

“We work in an industry where buyers are cautious about purchasing off the plan,” Nugent says. “As a country, we need people to feel confident in that buying process. Having a Resilience LDI on a building gives those buyers absolute peace of mind when transacting.”

Nugent says as construction standards and buyer expectations continue to rise, Resilience LDI is becoming a crucial part of the insurance landscape.

“Builders, developers, and property owners need to recognise its unique role in safeguarding against long-term risks. It is not a replacement for other insurances, but a necessary addition that fills critical gaps in coverage.”

Resilience has been working closely with the Victorian Government over the past 12 months to help establish a workable framework for the policy’s adoption.

Victoria’s Strata Building Bond scheme, which operates similarly to the same program in NSW, introduced in 2017, requires developers of apartment buildings with four or more storeys to provide a bond equal to two per cent of the total contract price. This bond, held by the Building and Plumbing Commission, is intended to cover the cost of fixing defects found in common areas within a set timeframe after completion.

However, one of the key criticisms of the bond scheme is that it only covers common property—not private areas or structural defects. It also doesn’t address issues related to faulty materials, design, or workmanship.

Latent Defects Insurance, typically costing between 1 and 1.5 per cent of a development’s total build cost, offers far broader protection. As a “first right” policy, it serves as the primary source of financial coverage in the event of structural issues. LDI covers the cost of repairing or replacing components damaged due to defects in design, materials, or workmanship, with a 10-year coverage period beginning from the date of the Occupancy Certificate.

The New South Wales Government has also thrown its support behind Latent Defects Insurance and is expected to announce it will become mandatory in 2028.