Growing your business with Domestic Building Insurance (DBI)

  • Posted: 33 days ago
  • By Bethan Jones

If you are a residential builder looking to grow your business, it is important to consider your domestic building insurance (DBI) limits, and to understand how to best position your business to achieve limit increases in the future.

DBI limits control the type of project you can undertake, the maximum contract value, and the overall amount of work you can have in progress at any one point in time.

To apply for an increase, you must undertake a DBI eligibility review with the Victorian Managed Insurance Authority (VMIA). When undertaking their assessment, the VMIA will assess a range of financial and non-financial factors. However, the financial performance of your business is the primary consideration.


Non-Financial/Technical Considerations

  • Industry experience: your time in the building industry, roles you have undertaken, complexity and type of projects completed.
  • Work in progress at time of assessment: number of jobs outstanding at any one time, progression of these jobs along reasonable/standard timeframes.
  • Forecast of upcoming works: projects you have signed contracts, projects you are tendering and overall growth aspirations.
  • Personal asset position of the directors of the business.
  • Any adverse credit history, e.g. court actions, debt defaults, previous insolvencies, or bankruptcy
  • Prior legal judgements against the applicant or disciplinary findings by a regulatory authority.


Financial Considerations

The below represents some of the major financial indicators considered by the VMIA, representing ideal minimum measures to support an approval.

  • Gross Profit Margin (Sales minus Cost of Goods Sold, divided by Sales)
  • Net Profit Margin (Gross profit minus all other expenses, divided by Sales)
  • Working Capital (Current assets divided by current liabilities)
  • Adjusted Net Tangible Assets (ANTA) to turnover limit (Equity position as per balance sheet, adjusted for related loans into/out of the business and any intangible assets)
  • Paying Creditors within credit terms
  • Collecting Debtors promptly


As a result of the emphasis on financial performance, MBIB has employed a mix of qualified accountants and previous DBI underwriting staff within our eligibility team, providing you with accounting and underwriting expertise from within our business, helping us work with you, your accountant, and the VMIA to deliver the DBI limits aligned with growth aspirations. 

Please note the above information is general in nature and is intended to provide broad guidance on the assessment criteria used when the VMIA review eligibility limits. Meeting these guidelines does not guarantee you will obtain your requested limits. Eligibility limits are approved at the discretion of the VMIA; criteria used, and benchmarks listed are both subject to change.

For more information, talk to our specialist team or contact us.

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