Professional indemnity insurance for building industry
- For an individual to perform private certification functions a building certifier must hold the appropriate endorsement under the Building Act 1975 (the Act) and meet the eligibility requirements prescribed in the Building Regulation 2021 (BR 2021).
- Until August 2019, the Building Regulation required exclusion free Professional Indemnity Insurance (PII) to be held as an eligibility requirement for the private building certifier endorsement. Exclusion free PII is designed to cover a certifier in case of damage caused by their negligent or mistaken professional advice, or services, across all areas of their work.
- In response to the 2017 Grenfell fire, where 71 people tragically died, insurance companies reset their risk assessments and significantly increased PII premiums and changed conditions to the cover offered. Some insurance companies imposed cladding exemptions on PII policies and in some cases, broader exemptions relating to non-conforming building products.
- This resulted in some building certifiers being unable to access affordable PII to be able to satisfy the licence requirements of exclusion free PII, and consequently, no longer be able to undertake the regulatory function.
- Since August 2019, the Building Regulation has provided a time limited period exemption for private certifiers to be able to perform their functions while holding PII with cladding exclusions. The Building and Other Legislation Amendment Regulation 2025, amendments will extend this time limited period until 30 June 2027 to enable private building certifiers to continue to be licensed.
- This exemption delivers ongoing certainty about PII provisions for certifiers and industry, allows for the continued supply of state-wide housing and enables for the consideration of the outcomes and recommendations of the Productivity Commission review, expected to be completed by the end of 2025.