Registered building practitioners in New South Wales will be required to hold professional indemnity (PI) insurance by July 1, 2026, following a recent extension of the compliance deadline under the Design and Building Practitioners Act 2021.
The legislation, which originally set a 2025 enforcement date, has been delayed by 12 months to allow more time for industry preparation.
Under the updated rules, builders must secure PI cover that they reasonably assess as sufficient to meet their potential liabilities. However, the act does not define a fixed minimum coverage amount.
BizCover is urging building professionals to review their existing arrangements ahead of the revised compliance date.
Dan Quinn, head of customer acquisition at BizCover, said PI insurance is a core component of risk mitigation.
“This isn’t just about ticking a compliance box,” he said. “It’s about protecting your business’s future, profitability, and reputation, as well as your clients.”
The act also introduces a statutory duty of care for practitioners, which applies retrospectively. This provision allows for claims to be made up to ten years after construction is completed if defects cause financial loss to landowners.
According to Quinn, this extended liability period heightens the need for tailored PI protection.
“Professional Indemnity cover can help to provide protection against risks related to professional services and advice,” he said. “It’s always important to regularly review your insurance to make sure it’s still fit for purpose. But there is an added impetus for NSW building practitioners to review theirs before the 1st of July deadline.”
From mid-2025, BizCover will begin distributing PI products from providers including DUAL and Chubb. Available cover limits will start at $250,000 and extend to $10 million, targeting businesses with annual turnover up to $10 million.
The revised compliance timeline comes as builders continue to navigate persistent cost increases.
According to data from Gallagher, overall construction costs in Australia have surged more than 30% since early pandemic disruptions, driven by global supply chain bottlenecks, labour shortages, and material price inflation.
Key inputs like copper, aluminium, and HVAC systems remain elevated in cost, exacerbated by energy price volatility and shipping delays. A shortage of qualified tradespeople has further pressured project schedules and budgets.
Regulatory tightening has added to cost burdens. High-profile structural issues, such as those at the Lacrosse and Opal Tower developments, have prompted enhanced compliance requirements, including the use of certified materials and processes.
In this environment, builders are increasingly focused on managing price risk through contractual and insurance mechanisms.
Gallagher recommends options such as long-term supplier agreements, cost-sharing arrangements via open book contracts, and substituting high-cost materials where feasible.
On the insurance front, the firm points to key coverages including contract works, construction all risks (CAR), and PI as tools for managing risks tied to theft, weather, design errors, and cost volatility.
Policyholders are also encouraged to check whether extensions for project delays and inflation-linked adjustments are included in their terms.
