Professional Indemnity for NSW Builders: What the DBP Act Requires

If you’re a registered building practitioner in NSW, the professional indemnity requirements under the Design and Building Practitioners Act 2020 have been a moving target. The deadline has shifted more than once — most recently in June 2026, when the NSW Government extended the exemption again. Here’s where things actually stand, what the Act requires, and what to consider before the current exemption ends.

The short version: registered building practitioners are required under the DBP Act to be adequately insured for the building work they carry out. A regulatory exemption has deferred that requirement, and following the June 2026 amendments the exemption now runs to 30 June 2027 — meaning mandatory professional indemnity insurance for registered building practitioners is currently scheduled to commence on 1 July 2027. Design practitioners and principal design practitioners are already subject to insurance requirements when making declarations.

What the DBP Act Does

The Design and Building Practitioners Act 2020 was NSW’s response to well-publicised defect failures in residential apartment buildings. It introduced three things that matter to builders:

• Registration — design practitioners, principal design practitioners, building practitioners, professional engineers and specialist practitioners working on regulated buildings must be registered with NSW Fair Trading / Building Commission NSW.
• Compliance declarations — regulated designs and building work on class 2 buildings (and mixed-use buildings with a class 2 part) require declarations lodged on the NSW Planning Portal.
• A statutory duty of care — section 37 imposes a duty on anyone carrying out construction work to exercise reasonable care to avoid economic loss caused by defects. This duty is owed to current and future owners and can be enforced for years after completion.

That last point deserves emphasis: the statutory duty of care applies now, regardless of the insurance exemption. Builders are already exposed to defect claims for economic loss — the exemption only defers the obligation to hold insurance against that exposure, not the exposure itself.

Which Buildings Are Caught

The DBP regime currently applies to building work on class 2 buildings (broadly, apartment buildings) and buildings with a class 2 part — including alteration, repair and renovation work on existing class 2 buildings. The planned expansion to remedial work on existing class 3 and 9c buildings (boarding houses, residential care buildings) has been deferred to 1 July 2028 under the June 2026 amendments.

The Insurance Requirement and the Current Timeline

Under the Act, a registered practitioner must not carry out regulated work unless adequately insured. For building practitioners, that requirement has been progressively deferred by regulation — the government has acknowledged the limited availability of suitable insurance products for this exposure. The current position following the June 2026 amendments:

• Registered building practitioners: exemption from the PI requirement extended to 30 June 2027; the requirement is scheduled to take effect from 1 July 2027.
• Design practitioners and principal design practitioners: insurance obligations apply in connection with their registration and declarations — if you’re a builder who also takes design responsibility (design and construct delivery, amending designs, issuing specifications), your position needs particular attention.
• Certifiers: separate requirements apply, including a continuing exemption allowing cladding-related exclusions.

Timelines under this Act have moved before, and they can move again in either direction. Check the current position with Building Commission NSW before making decisions based on a deadline.

What “Adequate” Insurance Means

The Act doesn’t prescribe a single minimum dollar figure for building practitioners. Instead, the framework requires cover that is adequate for the work being carried out, and practitioners are expected to assess adequacy against considerations such as:

• Whether the premium and excess are affordable for the business
• Whether the cover suits the nature and scale of the projects undertaken
• Policy exclusions, sub-limits and conditions — and whether they cut across the actual work performed
• The retroactive date — whether the policy responds to work completed in prior years

That last item is where builders most often get caught. Professional indemnity is written on a claims-made basis: the policy that responds is the one in force when the claim is made, not when the work was done. With a statutory duty of care that can be enforced roughly a decade after completion, a policy with a recent retroactive date — or a gap in continuous cover — can leave years of completed projects uninsured. Continuity matters as much as the limit.

Why Builders (Not Just Designers) Face PI Exposure

A common misconception is that PI is a designer’s problem. Builders face professional indemnity exposure whenever they do more than build strictly to someone else’s design:

• Design and construct contracts, where design obligations sit with the builder
• Amending, substituting or value-engineering design details on site
• Issuing or interpreting specifications
• Coordinating design consultants and passing on (or failing to pass on) design changes
• Providing advice the client relies on

None of that is covered by public liability, which responds to personal injury and property damage — not economic loss from defective design or professional decisions. The two covers do different jobs, and class 2 work in NSW increasingly demands both.

Practical Steps Before 1 July 2027

• Confirm your registration class and whether your work falls within the regulated scope (class 2 now; class 3/9c remedial from 2028)
• Map where you take design responsibility across current and pipeline projects
• If you hold PI already, review the retroactive date, exclusions and sub-limits against DBP-regulated work
• If you don’t, start early — capacity for construction PI in Australia is limited and placement takes longer than most builders expect
• Keep records: declarations, design changes, and who made which decision — they matter enormously if a claim arrives years later

Frequently Asked Questions

If you’d like advice on how these requirements apply to your business, or a review of your current professional indemnity position, contact us or call Petara on 0410 152 835. You can also read our related guide on surety bonds for contract security.

This article is current as at July 2026 and describes the position following the June 2026 regulatory amendments; requirements may change. The information provided is general advice only and has been prepared without taking into account your particular objectives, financial situation or needs. Silverback Insurance Pty Ltd (CAR 1283436 | ABN 74 643 561 746) is a Corporate Authorised Representative of Australian Broker Network Pty Ltd (AFSL 304 139).