Insurers may be on the hook after Victorian builder goes bust

The sudden collapse of Victorian home builder Porter Davis may leave domestic building insurance providers on the hook as appointed liquidator Grant Thornton says it is working to find a solution to support customers.

State-owned Victorian Managed Insurance Authority (VMIA) has provided information for affected insured property owners, asking them to check if they’re insured with VMIA and to refer to their certificate of insurance for the name of the insurer.

VMIA is also holding homeowner information sessions via Zoom on Wednesday and Thursday as well as the following week.

In Victoria domestic building insurance (DBI) is required for all domestic building projects, where the contract price is over $16,000. DBI protects homeowners in the event that their building project cannot be completed or has defective works which cannot be rectified if the builder has become insolvent, died or disappeared.

VMIA says in Victoria it is the builder’s responsibility to purchase DBI for the building project on behalf of the homeowner.

insuranceNEWS.com.au has reached out to VMIA for more on the situation.

Grant Thornton says Porter Davis has over 1500 current homes in progress in Victoria and a further 200 homes in Queensland.

There are also 779 signed contracts with customers where building has yet to commence, the liquidator said in a statement.

“The liquidators are working urgently to determine if a solution can be found to support customers and some employees, including by engaging with key stakeholders and potential interested parties who may be willing to take over the current customer contracts,” the statement said.

Grant Thornton says works on current projects have ceased immediately and some affected customers have told various local media outlets that their unfinished homes were the target of looting.

The liquidator says investigations will continue into the reasons for the collapse of the builder.

“The extremely challenging environment for residential home building has directly contributed to [Porter Davis’] financial position, with rising input costs, supply chain delays, labour shortages, and a drop in demand for new homes in 2023 impacting the group’s liquidity,” a spokesperson said.

“Notwithstanding the financial support from shareholders and lenders, the group has exhausted options to secure the further funding required to allow Porter Davis to continue to operate viably, and the directors were left with no option but to place the companies into liquidation.”

Porter Davis has around 470 employees and was forecasting revenue of $555 million for this financial year.