Last week, the Victorian Minister for Planning, Richard Wynne, announced reforms to Professional Indemnity (PI) Insurance held by building practitioners effective from 12 August 2019.
While all building practitioners are required to be covered by insurance (pursuant to section 135 of the Building Act 1993 (Vic) (the Act)), the reforms allow them to hold PI Insurance that excludes liability for loss or damage arising from cladding.
Due to the risks surrounding flammable cladding (which has been widely used across Australia’s high-rise buildings), many building practitioners have increasingly been unable to obtain PI Insurance forcing many out of work and pushing the building industry to crisis point. Without the relevant PI Insurance, building practitioners are not able to gain registration in Victoria pursuant to the Act. In response to the growing concerns by the building industry, the Victorian Government announced the Order in the Gazette No. S 293.
Under these new changes, the PI Insurance policy may exclude liability for loss or damage arising from, or concerning building work (as defined in the Act), where the claim directly relates to or is connected with:
- an external wall cladding product that does not comply or is installed, used or applied to a building in a manner that does not comply with the requirements of the Building Code of Australia, an Australian Standard or any other law of the Commonwealth, Victoria or any other State or Territory to the extent that it applies to cladding; or
- a high-risk external wall cladding product that is installed, used or applied to a building in a manner that does not comply with any declaration made under section 192B of the Act.
What should you do?
All building practitioners need to ensure their PI Insurance will, from 12 August 2019, meet the scope and coverage prescribed by the Minister for Planning in Gazette No. S 293.
To view Gazette No. S 293 in full, click here.