Contractor insurance requirements

Professional indemnity insurance

Professional Indemnity (PI) insurance provides financial protection and may cover the costs if a contractor has caused building errors or omissions.

Getting PI insurance is a requirement for some licensees and is a matter of simply contacting an insurance provider.

You can view a list of licence classes that require PI in the MFR Regulation. Once you become licensed, you need to make sure that your insurance remains active.  

Acceptable evidence of cover

Some licensees must provide evidence of current PI insurance by providing:

  • a copy of the certificate of currency for the insurance; 
  • if the professional indemnity insurance does not comply with the minimum standard of PI insurance specified in Part 4B s17K of the MFR Regulation 2018 —a declaration, in the approved form, about the non-compliance; 
  • if the professional indemnity insurance complies with the minimum standard of PI insurance specified in Part 4B s17K the MFR Regulation 2018—a statutory declaration verifying compliance; 
  •  if the insurance policy for the professional is arranged by an insurance broker—a receipt given by the broker for payment of the insurance

Applying for a PI exemption

You can apply for an exemption by completing the Declaration – Professional Indemnity Insurance form (PDF), and providing evidence that:

  • PI is not available in the market place, or
  • it is economically unviable for you to obtain PI taking into consideration relevant factors including:
  • the cost of the insurance; and
  • the previous and expected future turnover of the relevant business or part of the business.

If we grant exemption, a condition will be placed on your licence. You’ll be required to give your clients a notice in writing (a clause in a contract, or by a separate notice), stating you do not hold PI Insurance.

Note: You don’t need to provide PI if you hold a Nominee Supervisor, Site Supervisor or Fire Protection – Occupational licence.

Exemption from providing financial documentation by holding PI

In certain circumstances, you may be exempt from providing financial information.

If you apply for, or hold a contractor licence in any of the following licence classes, and you meet the relevant conditions, you can provide evidence of your current PI Insurance and a completed Estimated Maximum Revenue (PDF), instead of providing financial information:

  • Builder Project Management Services
  • Building Design – Low Rise
  • Building Design – Medium Rise
  • Building Design – Open
  • Hydraulic Services Design
  • Hydraulic Services Design (excluding design of on-site domestic waste water management)
  • Site Classifier
  • Site Classifier (excluding on-site domestic waste management).

You are not eligible for this exemption if you already hold, or are applying for, a contractor licence in a class other than those mentioned directly above, e.g. you hold or are applying for a Carpentry contractor licence.

What if I have been granted a PI exemption?

The exemption from annual turnover is not applicable and you must provide the relevant financial information.