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The NSW construction industry is approaching a major compliance milestone. From 1 July 2026, a registered building practitioner in NSW must be indemnified under an insurance policy for work they carry out in that capacity. This change sits within the broader compliance framework established under the Design and Building Practitioners Act 2020 (NSW) and supporting regulation, which have progressively lifted accountability standards across building and construction work in the state.
For many businesses, this requirement will not simply mean “having a policy in place”. It will require careful review of insurance adequacy, scope of work, and documentation, because NSW guidance places the responsibility on practitioners to ensure their cover is appropriate for the liabilities that may arise from their work.
What is changing on 1 July 2026?
NSW Government guidance states that registered building practitioners must hold an indemnity insurance policy from 1 July 2026, in addition to other insurance requirements that may apply. Specifically, it explains that “in addition to taking out Home Building Compensation coverage, from 1 July 2026 you must also be indemnified under an insurance policy for work you carry out as a registered building practitioner.”
This deadline is particularly important because earlier commencement dates have been extended. The final cut-off date is now confirmed as 1 July 2026, meaning businesses that have delayed their PI planning due to market availability issues should treat the next 12 months as critical preparation time.
Who must hold PI insurance under the NSW framework?
The requirement for Professional Indemnity insurance is not limited to builders. NSW regulatory guidance indicates that registered design practitioners and professional engineers must have Professional Indemnity insurance, and that the policy may be held in several forms, including an individual policy, partnership policy, or corporate policy.
The Regulation also specifies that professional engineers must be indemnified under a compliant PI policy or be covered by an approved alternative arrangement (including certain professional standards schemes).
For registered building practitioners, the obligation becomes enforceable from 1 July 2026 and applies to the work performed as part of their registered practitioner role.
What does “adequate cover” mean?
One of the most significant features of this compliance model is that it does not mandate a fixed minimum level of cover for all practitioners. Instead, NSW places the responsibility on practitioners to assess the adequacy of their policy based on their own circumstances.
NSW guidance states that when choosing an insurance policy, practitioners must consider factors including their financial resources, the risks associated with their work, and the policy limits, alongside other factors outlined in the Regulation. The policy must provide “an adequate level of cover to indemnify you for your work.”
This means compliance is not purely administrative. It is tied to risk and accountability. Different practitioners will have different risk exposures depending on the nature of their work, project types, contract obligations, and the scale of financial impact that could arise from defects or alleged negligence. NSW also notes that practitioners may need to demonstrate that they have assessed the adequacy of their cover, and recommends seeking independent advice on the amount and type of cover required.
Why PI insurance is central to construction compliance
Professional Indemnity insurance has always been considered important in the construction industry, but the Design and Building Practitioners framework reinforces its role as a core compliance protection mechanism.
The Act and Regulation focus heavily on ensuring that those who influence building outcomes are appropriately accountable and that consumers and property owners are protected from defective or negligent work. In practice, this increases scrutiny of professional decisions and elevates the importance of insurance that responds properly to professional risks.
The fact that NSW extended the commencement date also reflects a practical reality. PI availability has been challenging in parts of the construction sector, particularly for higher-risk work categories. That extension provided additional time for the market to respond and for practitioners to become compliant before the obligation becomes enforceable.
What NSW construction businesses should do now
With 1 July 2026 approaching, construction businesses should treat PI compliance as part of their overall governance and risk management, rather than leaving it to the final renewal cycle. This starts with confirming practitioner registration status and what activities fall within the regulated scope of work.
Businesses should also review the wording and structure of their PI insurance, not simply the policy limit. Many PI issues arise from exclusions, insured capacity wording, retroactive dates, and whether the policy is aligned with the business model and service offerings. It is also wise to keep records demonstrating how the “adequacy” decision was made, because NSW guidance indicates practitioners may need to show that assessment.
For building practitioners and construction professionals who want help navigating these requirements, Insurance Online can provide access to insurance resources and connect businesses with specialist brokers who understand construction industry risk. This can help practitioners review their options, compare suitable Professional Indemnity policies, and prepare the relevant documentation ahead of the compliance deadline.
Finally, it is important not to assume PI replaces other insurance requirements. NSW explicitly states that the PI requirement for building practitioners is in addition to Home Building Compensation coverage, where applicable.
The compliance deadline that matters
The key date for NSW registered building practitioners is 1 July 2026. By that time, practitioners must be indemnified under an appropriate insurance policy for work carried out as a registered building practitioner.
For registered design practitioners and professional engineers, Professional Indemnity insurance requirements already apply, and policies must comply with the Regulation or approved alternatives.
NSW is moving toward a stronger compliance environment for construction professionals, and Professional Indemnity insurance is now a clear and central part of that shift. From 1 July 2026, registered building practitioners will be required to hold indemnity insurance for their work, joining existing PI obligations for registered design practitioners and professional engineers.
The key compliance risk is not only failing to hold a policy, but failing to hold an adequate policy that reflects the actual risks of the work being performed. With less than a year until the requirement comes into effect, NSW construction businesses should use this period to review registrations, insurance arrangements, and documentation processes to ensure they can demonstrate compliance when required.
Published: Friday, 20th Feb 2026
Author: Paige Estritori
