Under the new regulations, building practitioners are required to secure a PI policy that, in their reasonable opinion, provides adequate coverage for liabilities that could arise during their work. Notably, the legislation does not specify a minimum coverage amount, placing the onus on practitioners to assess and obtain sufficient insurance based on the scope and nature of their projects.
Dan Quinn, Head of Customer Acquisition at BizCover, emphasized the significance of this requirement, stating, "This isn't just about ticking a compliance box. It's about protecting your business's future, profitability, and reputation, as well as your clients."
One critical aspect of the Act is the imposition of a statutory 'duty of care' on professionals involved in construction work. This duty applies retrospectively, allowing claims to be made up to ten years after the completion of a project if defects cause financial loss to landowners. Consequently, building practitioners must be vigilant in ensuring their PI coverage is comprehensive and aligns with the extended liability period.
To assist builders in meeting these new requirements, BizCover has announced plans to offer PI insurance products tailored for registered building practitioners. Starting 1 July 2025, they will provide quotes from insurers such as DUAL and Chubb, with coverage limits ranging from $250,000 to $10 million. These options cater to businesses with annual revenues up to $10 million, offering flexibility to practitioners of varying sizes.
Quinn advises builders to proactively review their insurance policies ahead of the compliance deadline. "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," he noted.
In summary, the forthcoming mandatory PI insurance requirement underscores the importance of adequate risk management in the construction industry. Builders are encouraged to assess their current insurance arrangements, seek professional advice if necessary, and ensure they are fully compliant well before the July 2026 deadline to safeguard their businesses and clients.
