Under the updated regulations, builders are required to obtain PI coverage that they reasonably assess as sufficient to meet potential liabilities. Notably, the act does not specify a fixed minimum coverage amount, placing the onus on practitioners to determine appropriate levels of insurance based on their individual risk profiles.
Industry experts are urging building professionals to review and update their insurance arrangements well ahead of the compliance deadline. Securing adequate PI insurance is not merely a regulatory requirement; it serves as a fundamental component of risk management, protecting businesses from potential financial losses arising from claims related to professional services and advice.
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 the completion of construction if defects cause financial loss to landowners. Consequently, the extended liability period underscores the necessity for tailored PI protection to safeguard against long-term risks.
In light of these developments, insurance providers are expanding their offerings to accommodate the needs of building practitioners. For example, from mid-2025, certain insurers will begin distributing PI products with coverage limits ranging from $250,000 to $10 million, targeting businesses with annual turnovers up to $10 million.
Builders are also advised to consider the broader context of rising construction costs, which have surged by over 30% since early pandemic disruptions. Factors such as global supply chain bottlenecks, labour shortages, and material price inflation have contributed to this increase, further emphasising the importance of comprehensive insurance coverage to mitigate financial risks.
To manage cost exposure effectively, builders are encouraged to explore various strategies, including long-term supplier agreements, cost-sharing arrangements, and substituting high-cost materials where feasible. Additionally, reviewing insurance policies to ensure they include extensions for project delays and inflation-linked adjustments can provide further financial protection.
In conclusion, the impending 2026 deadline for securing professional indemnity insurance presents both a challenge and an opportunity for NSW builders. By proactively obtaining appropriate coverage and implementing strategic risk management practices, builders can ensure compliance with regulatory requirements while safeguarding their businesses against potential liabilities.
