If you’re a builder in NSW, or you support a building business behind the scenes, there’s an important insurance change to have on your radar.
From 1 July 2026, many builders working on certain residential projects may need to have Professional Indemnity (PI) insurance in place.
This mainly affects builders involved in Class 2 apartment projects and anyone taking on design-related responsibility under the Design and Building Practitioners Act (DBP Act).
While July might sound like it’s still a fair way off, these things have a habit of creeping up quickly, especially when you’re already juggling quotes, jobs, clients, staff and everything else that comes with running a building business.
SO, WHO DOES THIS APPLY TO?
A lot of builders assume this only applies to architects, engineers or designers. But in reality, it can apply much more broadly than people expect.
You may need to look into this if your business:
– Works on Class 2 or multi-unit residential projects in NSW
– Offers design and construction services
– Makes changes to plans or specifications
– Coordinates consultants or engineers
– Has any level of design responsibility, even informally
Even if you think of yourself as “just the builder”, there can still be exposure in the decisions made on site every day.
WHY IS THIS CHANGING?
These requirements are part of the NSW Design and Building Practitioners Act, which came in after a number of highly publicised building defect issues.
The goal is to improve accountability across design and construction, especially when it comes to decisions that can affect the long-term performance of a building.
One part of that is making sure the right businesses have Professional Indemnity insurance in place where design responsibility exists.
WHAT IS PI INSURANCE & WHY DOES IT MATTER?
PI insurance is different from Public Liability or Contract Works insurance.
Public Liability is generally there for injury or property damage. Contract Works is there for physical loss or damage during construction.
PI insurance is different. It is designed to respond to claims involving financial loss caused by advice, design input, documentation, or decisions made during the job.
And that’s the part many builders don’t realise: you don’t have to be drawing up plans to have a PI exposure!
WHERE BUILDERS CAN GET CAUGHT OUT
PI exposure can come from everyday decisions like:
– Misreading plans
– Missing a change in documentation
– Suggesting a different material or method
– Relying on advice from a consultant that turns out to be wrong
– Approving a workaround on site
For example, a builder might approve a small waterproofing change during construction. A few years later, there’s a failure, and the owner wants to recover the repair costs. The issue may not be the physical work itself, but the decision made at the time.
That is where PI insurance may become important.
WHAT SHOULD BUILDERS DO NOW?
The good news is you do not need to overcomplicate it. But it is worth getting clear on where your business stands now, rather than leaving it until the last minute.
A good place to start is:
- Check whether your work is captured
Look at the types of projects you do and whether your business is making design decisions.
- Review your current insurance
If you already have PI insurance, make sure it actually matches the work you do.
- Make sure your policies work together
PI, Public Liability and Contract Works all cover different things, so there must be no gaps.
- Choose the right limit
Your level of cover should reflect your contract size, project type and responsibilities.
- Think long term
Claims do not always show up straight away, so it is important to understand how cover will work down the track too.
COMMON MISTAKES WE’RE ALREADY SEEING
As this deadline gets closer, a few common issues are popping up:
– Assuming Public Liability is enough
– Not realising design exposure already exists
– Leaving PI too late and finding fewer options available
– Not thinking about what happens if the business stops trading later on
Getting organised now can make things a lot easier!
FINAL THOUGHTS
If your business is working on, or plans to work on, Class 2 projects in NSW, this is worth looking at sooner rather than later.
The deadline is 1 July 2026, and waiting too long could leave you with limited options or gaps in cover.
For many building businesses, this is really about making sure your insurance reflects the way you actually work, especially if design decisions form part of the job.
If you’re not sure where you stand, getting advice now can help you understand:
– Whether you need PI insurance
– How much cover may be appropriate
– Whether your current policies are aligned properly
That way, you can move forward with more confidence and fewer surprises.
Contact the team at Webber Insurance if you have any questions.
Builders Insurance – https://www.webberinsurance.com.au/builder-insurance
Contract Works Insurance – https://www.webberinsurance.com.au/contract-works-insurance
Design & Construct Insurance – https://www.webberinsurance.com.au/design-construct-insurance
For enquiries:
Call – 1800 932 237
Email – tw@webberinsurance.com.au
