Daniel Andrews announces $15m in insurance cover for Porter Davis victims

The state government will provide insurance for hundreds of families affected by the Porter Davis collapse, with payouts of about $25,000.

The Andrews government will provide insurance for the victims of collapsed building giant Porter Davis who paid a deposit but were left high and dry by the builder.

Premier Daniel Andrews announced $15m to be paid out across 560 families who made an initial payment, had not started building but this month learned they had no coverage with the VMIA.

It does not yet apply to those customers whose homes are still under construction, with work under way to say if these builds could still be sold on to other companies.

Mr Andrews said a website would be set up on the VMIA website for victims to provide their documents and details of their contract.

The website is expected to be online within the next 24 hours.

If they fit the criteria for a claim, they will be treated as if they are insured and receive payouts in the range of $25,000.

Hundreds of homeowners were stunned to learn they had no coverage when Porter Davis went into liquidation.

Under a ministerial order, companies are expected to take out domestic building insurance when they receive a deposit but it is widespread practice across the industry not to take this out until a building permit is issued.

Daniel Andrews says investigations into Porter Davis are ongoing. Picture: David Crosling

Domestic building insurance covers deposits up to 5 per cent, meaning those who paid above this amount may not be able to get the remaining money back.

“This has been heartbreaking,” Mr Andrews said

“I know it has been quite frustrating, because it has taken a little bit of time. But getting it right is more important than doing it fast.”

The government’s powerful Expenditure Review Committee met at 9pm last night before signing off on the plan.

Mr Andrews said investigations into Porter Davis were ongoing and the government would look at what rules could be strengthened to prevent it happening again.

“They (customers) have done the right thing and it is in fact Porter Davis who have

not done the right thing and we will deal with them at the appropriate time,” he said.

It is hoped that those with homes under construction could still have their builds sold on to other companies so they can be completed.

But Mr Andrews acknowledged there was a concern these people could be asked to fork out more for their build than expected.

“I don’t want that to be the outcome but obviously I think we’re all concerned because logic tells you that might be one of the outcomes,” he said.

“We have to let (liquidators) Grant Thornton do their work, a lot of this may be case by case.”

Cath Evans, the executive director of the Property Council in Victoria, welcomed the announcement.

“The most important thing Victorians looking to build a home need at the moment is confidence - confidence that their home is going to be built and that if there are issues there is a sufficient safety net to catch them,” she said.

“This is critical for maintaining the supply of housing coming onto an already tight market, as well as supporting other home builders with that pipeline of work for their businesses.

“The support package for households caught out in the Porter Davis collapse announced by the Government today delivers that confidence and we welcome it.”