NSW Builders Face New Insurance Mandate: Professional Indemnity Coverage Required by 2026

The legislation, which originally set a 2025 enforcement date, has been extended by 12 months to allow industry participants adequate time to comply. Under the updated rules, builders must obtain PI coverage that they reasonably assess as sufficient to meet their potential liabilities. Notably, the act does not specify a fixed minimum coverage amount, placing the onus on practitioners to determine appropriate levels of insurance.

BizCover, an insurance provider, is urging building professionals to review their existing arrangements ahead of the revised compliance date. Dan Quinn, head of customer acquisition at BizCover, emphasizes that PI insurance is a core component of risk mitigation, protecting a business's future, profitability, and reputation, as well as its 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. Consequently, this extended liability period heightens the need for tailored PI protection.

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.

In summary, the new insurance mandate in NSW represents a pivotal shift in the regulatory landscape for tradies. By proactively securing appropriate PI coverage and understanding the implications of the Design and Building Practitioners Act, builders can ensure compliance and protect their businesses against potential liabilities.