Design and Building Practitioners Act and Regulation: New Insurance Requirements from 1 July 2024

On and from 1 July 2024 a registered building practitioner under the Design and Building Practitioners Act 2020 (the Act) will need to be adequately insured to perform building work.

Registered building practitioners will need to ensure that they are adequately insured for any work referred to in a compliance declaration given on and from 1 July 2024. This will include any work done before that date relating to that declaration.

Section 24(1) of the Act states:

  1. A registered building practitioner must not -

a) Provide a building compliance declaration to do related building work, or

b) Hold out that the practitioner is adequately insured with respect to the provision of the declaration or doing the work, unless the practitioner is adequately insured with respect to the declaration and work.

Clause 75 of the Design and Building Practitioners Regulation 2021 states:

  1. For the purposes of section 24(2)(a) of the Act, a registered building practitioner must be indemnified under an insurance policy, whether a professional indemnity policy or otherwise, that complies with this clause.
  2. An insurance policy must, in the reasonable opinion of the registered building practitioner concerned, provide for an adequate level of indemnity for the liability that could be incurred by the practitioner during the practitioner’s work.
  3. In determining whether a policy provides for an adequate level of indemnity, the practitioner must consider the following matters:

a) the nature and risks associated with the work typically carried out by the practitioner,

b) the volume of the work typically carried out by the practitioner,

c) the length of time that the practitioner has been registered,

d) a reasonable estimate of claims that could be brought against the practitioner based on paragraphs (a)–(c),

e) the financial capacity of the practitioner,

f) any limits, exceptions, exclusions, terms, or conditions of the policy

We recommend that you consult with your insurance broker. Otherwise, you can contact Master Builders Insurance Brokers, MBA Housing and Technical Department or MBA Legal Department for further questions.

The NSW Government is having an industry round table to discuss indemnity insurance on 24 August 2023. Anyone wishing to comment can address their emails to housing@mbansw.asn.au