JMD Ross Insurance Brokers has been active in discussions with the NSW Government and industry professionals about the proposed introduction of a statutory fitness for purpose obligation.

The proposal for engineering professionals, under the Design and Building Practitioners Act 2020 (NSW), has concerned both engineers and the insurance industry because it could have imposed obligations that fall outside the scope of a typical professional indemnity (PI) insurance policy.

After widespread pushback and meetings attended by JMD Ross and many industry professionals, the NSW Government has now relaxed its stance.

A new Practice Standard for Professional Engineers was introduced in March 2024. Pleasingly, it does not include an express fitness for purpose requirement. The ‘fit for purpose’ criteria defined in the practice standard accords with the standards expected of professional engineers.

Builder exemption extended

JMD Ross has received many inquiries from builders who were concerned they would be required to maintain PI insurance under the ‘adequately insured’ regime, in the NSW Act, effective from 1 July 2024.

As a traditional builder does not generally assume a design responsibility, there are no tailored insurance solutions for a risk that does not exist or, at worst, is minimal.

However, currently it appears the exemption for builders to maintain PI insurance has been extended until 1 July 2025.

Please contact JMD Ross if you wish to discuss this issue or to seek risk management and insurance advice:


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