From 1 July 2026, a lot of NSW builders won’t be able to work on certain projects without Professional Indemnity (PI) insurance in place.
If you’re involved in any design input on Class 2 apartment projects, or similar work under the Design and Building Practitioners Act (DBP Act), this is something you’ll need to get on top of.
This isn’t just a compliance issue. Without the right cover, you can:
- Be locked out of certain projects
- Breach contract requirements
- Be exposed to claims tied to design decisions
The exemption has been pushed out to 1 July 2026, but that time will go quickly.
Who This Applies To
A lot of builders assume this won’t apply to them. These changes catch more business than expected.
You’re likely impacted if you:
- Work on Class 2 or multi-unit residential projects in NSW
- Offer design and construct services
- Make changes to plans or specifications
- Coordinate consultants or engineers
- Have any level of design responsibility, even informally
Even if you see yourself as “just building”, there’s still exposure in how decisions are made on site.
Why This is Happening
The DBP Act came in after a number of well-publicised defect issues across NSW.
The goal is pretty simple, lift accountability around design and construction.
That includes:
- Registration requirements
- A legal duty of care to current and future owners
- More scrutiny around design and documentation
Part of that is making sure anyone involved in design carries PI insurance.
The key difference here is that PI covers financial loss caused by decisions, not physical damage. And those claims can come years after the job is finished.
Where Builders Get Caught
This is the part most people underestimate.
You don’t need to be drafting drawings to have PI exposure.
It can come from things like:
- Misreading plans or missing a change
- Suggesting an alternative material or method
- Relying on a consultant who gets something wrong
- Signing off on a workaround on site
Example:
A builder approves a small change to waterproofing during the build. A few years later there’s a failure and the owner claims the cost of repairs. The issue isn’t the physical work, it’s the decision that was made at the time.
That’s where PI comes in. Public Liability won’t respond to that type of claim.
What the Cover Needs to Look Like
There’s no single rule around limits, but there are some clear expectations.
Your PI policy should:
- Cover design input, advice, and documentation
- Have a limit that makes sense for your project size
- Respond to claims that come in years later
- Sit properly alongside your liability and contract works
The right setup depends on what role you’re playing. Builder only, D&C, or stepping into a design role.
Common Issues We’re Already Seeing
A few things are coming up consistently:
- Builders assuming Public Liability is enough
- Not realising they’ve taken on design exposure
- Leaving PI too late and finding options are limited
- No plan for what happens when they stop trading
Getting ahead of it now gives you more flexibility.
Key Timing
- DBP Act introduced in 2020
- Transition period runs through to 1 July 2026
- After that, PI becomes mandatory where you’re captured
As we get closer, insurers will become more selective, especially for builders entering PI for the first time.
What to Do Now
You don’t need to overcomplicate it, but you do need to be clear on where you stand.
Start with:
- Work out if you’re captured: Look at the type of projects you’re doing and whether you’re making design decisions.
- Review what you already have: If you’ve got PI, check if it actually matches what you’re doing.
- Make sure your covers line up: PI, Public Liability, and Contract Works need to work together.
- Get the limit right: This should reflect your contract size and level of responsibility.
- Think longer term: Claims don’t always come straight away, so you need to consider how you’re covered down the track.
How We Help
We work with many builders and D&C operators, so we’re seeing this play out in real time.
The main thing we focus on is making sure everything connects properly. Not just placing a PI policy, but making sure it fits with your Public Liability and Contract Works cover so there aren’t gaps.
We can help you:
- Confirm whether you’re actually captured under the DBP Act
- Review your current setup
- Recommend a structure and limit that makes sense for your work
- Make sure your policies align with your contracts
Next Steps
If you’re working on, or planning to work on, Class 2 projects in NSW, it’s worth reviewing this sooner rather than later.
We can run through a quick assessment with you to confirm:
- Whether you need PI
- What level of cover is appropriate
- Where any gaps might be
You can reach out to our team directly via phone, webchat, or email, or submit an enquiry through the website.
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