The insurance market for Building Certifiers in Australia is currently in massive turmoil and upheaval in relation to Professional Indemnity insurance. The number of insurers offering coverage is minimal, with costs skyrocketing, excesses increasing greatly, and blanket exclusions being applied for Combustible Cladding.
Different states and territories have different legislative insurance requirements for Building Surveyors. Currently three (3) out of 7 states and territories expressly allow cladding exclusions in policies, and the other four (4) do not have any stated requirements and remain silent.
A summary of Building Certifier Insurance Requirements as at January 2020, is provided below:
In terms of the immediate solutions, a recent report specifically commission by the Department of Housing and Public Words in Queensland and provided by PWC, gave no solution to the cladding crisis.
From my reading of the commissioned Interim report’s, the only quasi solution or recommendation to the issue was a paragraph on page 42 of 64 pages, and read as follows
“Professionals reported some positive outcomes as a result of changes to PI insurance, such as increases in risk management procedures and peer review. Notwithstanding, the majority of sentiments relate to continuing business uncertainty and worry.”
Professional Indemnity insurance only provides coverage if a policy is in place at the time of the future writ, and Construction Risk policies do have Defective work and Design exclusions.
There are potential solutions. A Building Certifier inspects the mandatory stages of building work through inspecting sites. They determine if there are issues with the build. A plan that gave greater certainty and involved strict liability ie no fault on the part of the third party, could be an option. For example, existing Workers Compensation schemes provide no-fault, strict liability coverage.
The advantage of this, is that insurance is in place, the ‘who is liable’ issues are not contested, consumers are paid expeditiously, builders and developers have coverage and certainty. This should ultimately result in reduced costs for all involved and improved building quality due to a no-fault, strict liability scheme in place.
This type of insurance is called Decennial Insurance. An article by Christopher Kerin from Kerin Benson Lawyers summarizes the advantages of having Decennial Insurance.
Another well written article by Kim Lovegrove addressed what caused the issues, and the methods of improving the landscape.
I hope this paper overall contributes towards providing information to assist in having a purposeful action plan put in place by authorities to resolve long-term the issue of insurance for Building Surveyors.
We are happy to provide a Professional Indemnity insurance quotation for your Building Certifier insurance from the limited insurers available in the current market also.