Victoria's fire services levy monitor, Professor Allan Fells, says insurance companies will face multi-million dollar fines if they are caught charging the old fire services levy after the first of July.
Local councils will begin collecting the of around $140 from July 1, replacing the former system where the levy was collected by insurers.
Professor Fells says many insurance companies have already removed the levy from their policies.
He will be watching closely to make sure companies do not directly or indirectly charge customers for the old levy next financial year.
"The insurers cannot charge the levy after the end of this year and there are massive fines if they do so, both for price exploitation and also for misleading the public," he said.
"(There are) fines of up to $10 million per offence and we'll be strictly enforcing the law."
The business sector says the changes should result in cheaper household insurance cover.