Design & Building Practitioners Act (NSW): Professional Indemnity insurance – what’s actually required?
If you’re a building practitioner under the NSW DBP Act, professional indemnity (PI) insurance isn’t optional — but it’s also not a one‑size‑fits‑all dollar amount. Click here for more information.
Here’s the plain‑English version 👇
What the DBP Act requires
You must hold PI insurance that is adequate for the work you do
The cover must respond to economic loss arising from:
Declarations
Designs
Building work covered by the Act
There is no fixed minimum sum insured in the legislation
Responsibility sits with you to assess adequacy — not the insurer
So what does “adequate cover” actually mean?
Adequate PI should reflect the risk profile of your work, not just a round number.
Key factors to consider:
✅ Maximum project value
✅ Nature of services (design, coordination, supervision, certification)
✅ High‑risk elements (structure, waterproofing, fire safety, cladding)
✅ Concurrent projects (aggregation risk)
✅ Claims‑made basis and need for run‑off cover
Example: $5m project – what cover makes sense?
Assume:
Residential apartment project worth $5m
You’re providing design and coordination services
High‑risk elements include structure and waterproofing
Multiple units → single defect can lead to many claims
Risk logic (simplified):
A serious defect rarely equals 100% of project value
But rectification + consequential loss + professional fees can be substantial
Multiple parties may be pursued — but you’re still “in the frame”
Practical outcome:
$1m PI → likely inadequate
$2m–$3m PI → may still be exposed on multi‑claim scenarios
$5m PI → commonly considered more realistic for this risk profile
Adequacy is about the credible worst‑case loss, not the cheapest premium.
The takeaway
Under‑insurance = personal exposure
Over‑insurance = wasted money
Right‑sized PI = risk managed properly
It could be part of your policy now. If in doubt, please contact us to review.
This is risk management, not compliance overreach.