NSW Delays Mandatory PI for Builders to July 2027 — Use the Time, Don’t Waste It
Updated September 2026 — reflects the NSW Building Commission’s latest extension of the professional indemnity insurance exemption.
NSW has again pushed back the date on which registered building practitioners must hold professional indemnity insurance. The exemption under the Design and Building Practitioners Act 2020 (DBP Act) has been extended by another 12 months, to 30 June 2027 — meaning mandatory “adequate” PI cover now starts on 1 July 2027.
That is the fourth time the deadline has moved since the Act commenced. If you’re a builder or design practitioner working on Class 2 buildings (and the Class 3 and 9c work the Act now captures), it would be easy to read this as another reason to put PI in the bottom drawer for a year. In my view, that would be a mistake — and having spent years administering construction contracts before becoming a broker, I’ve seen how these “we’ll sort it later” items behave when a project goes wrong.
What the DBP Act actually requires
Under the DBP Act and the Design and Building Practitioners Regulation 2021, registered design practitioners, principal design practitioners and building practitioners must be “adequately insured” against liability arising from the declarations they make — the design compliance declarations and building compliance declarations lodged on the NSW Planning Portal.
The Act deliberately does not set a fixed dollar amount. “Adequate” is self-assessed, and the Regulation expects you to weigh up:
- the nature and risk profile of the work you typically declare;
- the volume of work you undertake and your years in practice;
- a reasonable estimate of what claims could cost;
- your capacity to meet excesses and uninsured amounts; and
- the limits, exclusions and conditions of the policy itself.
Just as importantly, you must keep records showing how you decided your cover was adequate, retain them for at least five years, and produce them if asked. A certificate of currency on its own won’t be enough — the regulator can ask for your reasoning.
Why the deadline keeps moving
The honest answer: capacity. Insurers have been cautious about writing PI for builders who make building compliance declarations, particularly where cladding, waterproofing or certification exposures are involved. Each extension has been the Government acknowledging that some practitioners have had limited access to products that genuinely cover their declared work.
The market has improved since 2022 — more insurers are writing construction PI, and policies designed around DBP declarations now exist. But “improved” is not “cheap and instant”. Builders who wait until June 2027 will be applying at the same time as every other practitioner who waited, into a market that still underwrites this class carefully.
Why waiting until 2027 is the wrong move
1. PI is claims-made cover. A PI policy responds to claims made while the policy is in force — not to when the work was done. Every year you practise uninsured is a year of declarations that no future policy is obliged to pick up unless you negotiate retroactive cover, and retroactive dates are one of the first things insurers restrict for new entrants. Starting cover now means your retroactive date starts now.
2. Your declarations already carry personal liability. The DBP Act created a statutory duty of care to owners — including subsequent owners and strata corporations — and compliance declarations are signed by individuals. The liability exists today; only the insurance mandate has been deferred.
3. Underwriters reward history. Practitioners who come to market with two or three years of clean PI history, good contract documentation and a clear risk story get materially better terms than practitioners buying under deadline pressure. I’d rather negotiate for you in 2026 than queue for you in June 2027.
4. “Adequate” takes time to get right. If your work includes design responsibility under design-and-construct contracts, a standard builder’s PI wording may not respond the way you expect. Matching policy exclusions to your actual scope — design delegation, cladding, certification reliance — is exactly the work that shouldn’t be done in a rush.
What I’d do between now and July 2027
First, map your exposure: which projects involve compliance declarations, design input, or Class 2/3/9c work. Second, get an indicative PI quote now, even if you don’t bind immediately — you’ll learn what underwriters will ask of you and what your realistic premium looks like. Third, if you carry design responsibility, review whether design & construct cover or dedicated professional indemnity is the right structure. And document everything — the adequacy assessment the Regulation expects is far easier to build as you go than to reconstruct later.
We’ve set out the full picture for NSW practitioners — who’s caught, what insurers ask for, and how the declarations work — on our Professional Indemnity for NSW Builders page.
Talk it through before the queue forms
If you’re a NSW builder or design practitioner and you’re not sure whether your current cover would count as “adequate” under the DBP Act, that’s a 20-minute conversation, not a project. Book a time with me or request a quote and we’ll look at your actual scope of work, not a generic checklist.
Petara Tanuvasa is the director of Silverback Insurance, a construction-specialist insurance broker. Before broking, he worked as a contract administrator for major Australian builders. General information only — this article doesn’t take your personal circumstances into account.
