New South Wales (NSW) has introduced a new insurance product offering decennial liability coverage for residential apartment buyers, making it the first jurisdiction in Australia to do so.
Minister for Fair Trading Victor Dominello confirmed that the NSW Department of Customer Service accepted the Resilience Insurance application to offer decennial liability insurance as a form of security under the Strata Building Bond and Inspections Scheme.
“This is a big win for apartment owners and body corporates,” Dominello said. “For the first time in Australia, this will ensure building owners have access to a timely and straightforward remedy to remediate those defects.
“Decennial liability gives power to the purchasers and body corporates, who will no longer need to prove liability and will only have to demonstrate the damage for assessment.”
Decennial liability insurance provides people in residential apartment buildings with comprehensive consumer protection for building defects caused by substandard design and building work, as well as an insurance safety net for those lacking in residential apartment buildings.
Under the decennial liability insurance scheme, developers or builders will take out an insurance policy to cover any potential costs by an owner to fix severe defects – such as critical parts of a building's common property, including the building's structure, fire safety systems, and waterproofing – for up to 10 years. The insurance product also aims to provide insurance of first resort, enabling building owners to make a claim as soon as a defect is identified.
“The introduction of decennial liability insurance is the latest reform to the building and construction industry which will improve the design and construction of apartment buildings in NSW,” said NSW building commissioner David Chandler OAM. “These reforms have come about due to the united commitment of government and industry to transform the NSW construction sector.
“NSW is now in the position of being a national leader in offering an insurance product of this type for Class 2 buildings because of the three years of conscious effort and commitment by [the] government and industry to the journey we have been on under Construct NSW.”
A regulatory impact statement is in the works to mandate the insurance product to support the broader rollout of this consumer protection product for NSW apartment building owners.
