Insurance changes for New South Wales builders have been delayed once again.
Under the Design and Building Practitioners Act 2020, building practitioners in NSW must have Professional Indemnity insurance to maintain their registration.
However, the deadline for getting covered was pushed back in 2024, 2025, and again in June. Registered building practitioners now have until 30 June 2027 to put a policy in place.
SEE MORE: Tradie Tough Tests
While the NSW government has bought builders more time, you may want to consider getting covered now anyway. Building projects are often complex and operate on razor-thin margins. Professional Indemnity insurance helps registered building practitioners protect themselves financially should a project not go to plan.
Professional Indemnity explained
Professional Indemnity insurance covers builders for losses claimed by a third party and defence costs due to alleged or actual negligence in their professional services or advice.
For building practitioners, it can cover common industry activities and risks*, like:
- Lodging building compliance declarations
- Alleged breaches of professional duty, such as failing to get necessary permits and approvals or not completing work on time.
- Client document damage or loss when they are in your care, control, or custody.
What isn’t covered?
Common policy exclusions include*:
- Design or engineering services
- Property development activities
- Design compliance certification or verification
- Costs to rectify, repair, or remediate defective building work
- Costs to rectify or replace building work
- Building certification and verification of design compliance
Always check your policy wording for full details on what is and is not covered.
How much cover do NSW builders need?
Once the 2020 Act comes into effect, NSW builders will need an “adequate level of indemnity” to meet registration requirements. This is set out in the Design and Building Practitioners Regulation 2021, which also gives builders guidance for choosing the right amount of insurance for their businesses.
Under the Regulation, building practitioners must consider:
- The nature and risks associated with the work they typically do
- The volume of work they usually complete
- The length of time they have been registered
- A “reasonable estimate” of potential claims that could be brought against them
- Their financial capacity
- Any limits, exclusions, terms, or conditions on their policy
What else do builders need to do?
The Regulation also outlines record keeping practices and potential penalties for failing to comply with 2020 Act.
Builders will need to keep written records for at least five years that show how they determined that they have “adequate” Professional Indemnity insurance. These may include documents such as:
- Professional Indemnity policy documents
- Business turnover details
- Project value examples
- Other financial records
- Previous claim details
Registered building practitioners will face penalties for not having adequate Professional Indemnity cover or failing to keep records of their insurance. Penalties will vary for individuals and bodies corporate and depend on which part of the Act is broken.
Get covered in minutes
Protecting your business and staying ahead of the NSW Professional Indemnity requirement is easy with BizCover. Their Professional Indemnity policies for registered building practitioners offer cover amounts from $250,000 to $10 million, so you can choose a policy that fits your business needs.
Builders can also compare quotes for other policies—from Public Liability to cover for your tools and equipment—at the same time. Buy online or over the phone in minutes and get covered instantly. You’ll even receive an email with proof of insurance when you buy for easy record keeping.
For on the go cover, go BizCover or call 1300 805 821 today!
