Extension to PI insurance cladding exemption

Under the Building and Other Legislation Amendment Regulation 2019, which commenced on 9 August 2019, certifiers who have, or are seeking, a private certification endorsement are allowed to operate with professional indemnity (PI) insurance containing exclusions concerning non-compliant external cladding. The initial exemption was until 30 June 2021.

 The Building (Professional Indemnity Insurance) Amendment Regulation 2020 commenced on 18 September 2020, giving effect to the extension of the external cladding exclusion. Now, certifiers can continue to obtain a licence to operate with PI insurance containing exclusions in relation to non-compliant external cladding until 30 June 2022. 

Private certifiers must continue to hold the required PI insurance.

The required PI insurance must not contain any other exclusion that may extend past the definition below; for example, other non-conforming building products. Please take care to read your policy documents and ensure that any insurance you obtain doesn’t contain exclusions beyond the allowable exclusions.

What this means for certifiers

  • The previous PI exemption timeframe has now been extended.
  • Until 30 June 2022, to obtain an exempted licence, private certifiers do not require PI insurance coverage for performing private certifying functions directly related to external cladding or the use of external cladding that does not comply with any of the following:
    • an Act or other law of the Commonwealth or a State
    • an Australian Standard
    • the Building Code of Australia.
  • External cladding means cladding or a cladding system:
    • forming part of, or attached or applied to, an external wall or other external part of a building other than a roof; and
    • made, in whole or in part, of composite material.
  • Where a certifier obtains an exempted licence and holds PI insurance with a cladding related exclusion prior to 30 June 2022, their exempted licence will still be valid and they will be able to continue to operate until their exempted licence expires.

Certifier licence application forms have been amended to reflect the extension.

FAQs

Does that mean I don’t require PI insurance now?

A building certifier seeking endorsement as a private certifier must still hold professional indemnity insurance to be eligible for a licence.

Can my PI insurance be in the name of my company, or does it have to be in my name?

Where you are an employee or member of a company, you must provide the QBCC with evidence of the relationship that exists between you and your employer or company. You must also provide a certified copy of your employer’s or company’s professional indemnity insurance policy.

If my PI Insurance excludes external cladding, what does that mean for me?  Can I hold PI Insurance with cladding exemptions and still undertake work directly related to non-compliant external cladding?

Yes, as a licensee you may carry out building certifying functions relating to all types of external cladding.  While professional indemnity insurance cover can assist you in the event you are the subject of legal action; all insurance policies are the subject of exclusions from cover.  So you won’t be protected under your PI insurance for work that falls under an exemption, such as certifying non-compliant external cladding.  Consider seeking legal advice to help you better understand the risks involved for your business.

Do I need to advise my clients if I don’t hold PI insurance for non-compliant external cladding?

You should check your contracts, terms of trade and if necessary, consider seeking legal advice.

Why does this apply only until 30 June 2022?

This is the timeframe set by the Building (Professional Indemnity Insurance) Amendment Regulation 2020. If you hold an exempted licence in force immediately prior to 30 June 2022, the exempted licence will remain valid and you can continue to operate until your exempted licence expires.

Can I hold PI insurance with other exclusions?

No. A building certifier seeking endorsement as a private certifier must have professional indemnity insurance for all other certifying functions. Please take care to read your policy documents and ensure that any insurance you obtain matches the allowable exclusions.