By
Joel Robinson
•
5
min read
Would you pay another 1.5 to 2 per cent on your purchase price for ten years of build defect protection? According to Apartments.com.au audience research, many buyers would, and it's changing how developers are pricing risk.
At the Apartments.com.au Market Insights Live Event in Melbourne, Editor in Chief Joel Robinson caught up with Corey Nugent from Resilience Insurance for a fast-paced "5 minutes with Resilience Insurance" segment. They covered what developers need to know about latent defects insurance (LDI) as Victoria's new bond and insurance regime prepares to commence next year.
The reforms now arriving in Victoria have their roots in Sydney. Following a range of building problems, most notably at Opal Tower and Mascot Towers, state governments moved to respond.
"New South Wales probably led the charge, and created a whole heap of different regulatory reform, and one of those was to introduce what they call decennial liability insurance, or what we call LDI."
New South Wales legislated LDI in 2022 as an alternative to its strata bond, with amendments passing this year.
Victoria has now passed legislation for a developer bond, which will commence next year. It has also legislated LDI to start next year as an alternative to the bond.
According to Corey, the two states' regimes are closely aligned.
"The legislation in Victoria is almost identical to New South Wales. In fact, the triggers for the insurance regime are almost word for word the same."
Under both regimes, an insurer and its policy must be approved by the state government before LDI can be offered. For Resilience, that process took nearly two and a half years in New South Wales.
"We're the only approved insurer in Australia offering the product at the moment. There are others coming, and they're trying."
The Victorian legislation includes a mechanism for insurer approval, and Resilience is in discussions with the Victorian Government to reach that point.
For developers already working through feasibility and design, Corey said the timing is critical, because LDI must be secured before a project starts.
"LDI is a product that you have to have at commencement. That's not pay the premium in full at commencement. It's you have to lock the project in to the product at commencement."
The ideal window sits after planning approval but before building permit. That lead time allows Resilience to do its work and appoint a technical inspection service (TIS) provider before construction begins.
The upfront cash flow burden is also lower than many expect.
"The vast majority of the premium isn't dealt with until completion, so when you hand over. So it's not a premium or cash flow proposition from that point of view that I'm gonna have to put all of this money out at the start. But you've gotta get in early."
Resilience is producing a white paper to give the industry more clarity on what the bond and LDI each are, what they cost, and what they mean in practice. The paper is independent and is being produced by what Corey described as one of Australia's leading consulting companies. It is expected to be released within the next two weeks.
"The early indication of that is showing quite dramatically that the LDI is a better option."
The paper will examine LDI's marketability to consumers. It will also look at savings delivered through the technical inspection service, which Corey said is reducing rework, time and cost for builders and developers.
The two products differ in scope. LDI insures the full value of a property for ten years. The bond provides a position capped at 2 per cent for two years.
"For the developers in the room, after that two years, you wear the heat after that for litigation."
Both Joel and Corey pointed to buyer confidence as the central issue.
Joel shared two data points from Apartments.com.au's work across Resilience-insured projects in New South Wales. First, projects with LDI are outperforming those without, with higher conversion rates, higher lead generation, and agents reporting that buyers are choosing them over competitors that don't have LDI.
Second, while LDI costs around 1.5 to 2 per cent of build cost, an Apartments.com.au audience survey found buyers would rather pay an extra 1.5 to 2 per cent on their purchase price to get it. On a $1 million apartment, that's around $15,000.
"Rather than it being a sunken cost and a cost that you don't get back, you might be able to get some joy on the other side of increasing conversion and actually increasing prices." — Joel Robinson
Corey said buyers, particularly downsizers, are now more educated and investigate more thoroughly. In Sydney, where Resilience has offered LDI for four years, project marketers report it has become one of the first questions buyers ask.
"Do you have that ten-year insurance?"
Resilience has pushed through around 280 projects in New South Wales, ranging from $5 million to $850 million in value. Around 12,500 apartments are set to be delivered under the LDI program.
Developers using LDI are leveraging it heavily in their marketing. Corey pointed to a Waterloo project in Sydney where the developer built a dedicated section of its display suite to explain LDI, because buyers kept asking about it.
Joel noted that in dense areas with similar stock, once one project has LDI, competitors come under pressure to follow. Corey agreed, citing media coverage of two competing projects located almost side by side.
"One with LDI, one without it. The one with LDI sold out, sold out really quickly for an elevated yield. The one that didn't have it has still got apartments in stock."
For developers running multiple projects, LDI also offers a way to close out a job with confidence. Because the policy operates on a strict liability, no-fault basis, claims come to the insurer first, which Corey said cuts out opportunistic litigation.
"Being able to move on to your next job without looking over your shoulder and having to come back every ten minutes to fix issues or more accurately be worried about the opportunistic legal firm that's chasing you with a Supreme Court writ to say, 'Here's a file full of five thousand issues. Give me a million bucks or give me ten million bucks.' Moving on from that's really important for developers and builders."
The full "5 minutes with Resilience Insurance" segment from the Melbourne Market Insights Live Event is available to watch above.
For the full event summary, presentation download and photo gallery, visit: VIC Market Insights Event Summary September 2026
Join the waitlist for upcoming Market Insights Live Events: Market Insight LIVE Events Join the Wait List
In partnership with Resilience Insurance, iCIRT from Equifax, Artis, Urbis, Queers in Property and Conversion Assist.
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Greg Billings
Director of Residential Projects
Sonia Fava
Director
Nick Clydsdale
Senior Director
Heath Thompson
Director
Todd Matheson
Director
Thomas Panson
Project Sales & Marketing Agent
Scott Jessop
Head of Sales & Marketing
Alex Adams
Head of Sales & Marketing and
Head of New Business
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