09.10.2019

Building Designer Insurance Update

Since 2014 following the Lacrosse building fire, Combustible Cladding is an issue that has been on the radar of building professionals throughout Australia.

The Grenfell Tower tragedy in 2017 showed that there is a real risk with buildings that are clad with flammable panels. This tragedy was the event that shone the spotlight on these materials and in turn resulted in building audits across Australia. The results were shocking with hundreds of buildings throughout Australia clad with flammable panels.

It is now mid-year 2019 and there is still no clear solution as to responsibility. Building owners are left counting the cost of their properties being devalued or unable to be sold. Building professionals are holding their breath and waiting on State and Federal Governments to provide some direction and funding to fix the overall problem. The wheel has turned slowly, but we are starting to see some direction as to how this issue will be fixed.

Effect on Building Designers

As the leading insurance broker and partner to all of the major Building Designer Associations in Australia, we have in place a market leading Professional Indemnity policy that is accessible to all Building Designer members. We have worked hard in the past few years to identify clearly what is the role of a Building Designer across Australia.

By understanding the work that Building Designers undertake, we sit here comfortably with the knowledge that almost all of Building Designer’s across Australia that we insure have no exposure themselves. This is mostly due to Building Designers:

  • Working mostly with Residential Buildings up to 2 storeys (Class 1 Buildings) in height where there is no current impact of these types of materials
  • When working outside of Class 1 Buildings, having a good knowledge base when specifying products

As it stands and moving into the future, we see no adverse effects to the Building Designer Insurance programs due to combustible cladding.

Other Building Professionals

The future for other building professionals is not so bright. It has been well publicised that Building Certifiers have copped the brunt of it. This has resulted in insurers both locally and internationally being unwilling to provide coverage to Building Certifiers without exclusions.

Some States have moved to amend their legislation to allow Building Certifiers to continue to operate with these exclusions in place. It is unknown at this stage what effect this will have on the building industry as a whole. Building Certifiers that are continuing with their business are doing so with the understanding that they personally and their businesses are liable for insurance claims arising out of Combustible Cladding. This is a very difficult position to be in and has resulted in many Building Certifiers ceasing to operate.

Other building professionals including Architects, Engineers and Inspectors are facing an uncertain future if they have been involved in projects that have been identified as having Combustible Cladding. These firms would have seen, or will see, significant rises on their insurance premiums and excesses as well as exclusions where there is a significant Combustible Cladding exposure.

Builders themselves are also facing significant costs in rectification works if found liable. Many builders will find this type of work may be uninsured and will have to fund work themselves.

Ultimately, the cloud over a whole industry facing significant costs is not sustainable moving forward. Ideas have been floated by State Governments to partner with the Federal Government to fund rectification costs. Whilst this bailout would be good for consumers as well as the building industry, action could still be taken against those deemed negligent. Consumers would get their buildings fixed, however building professionals and their insurers could still wear the cost.

Moving Forward

Building Designers need to ensure they remain vigilant when selecting their partners in the building profession. Working with experienced and knowledgeable people as well as staying up to date with information from their Association, will ensure that their exposure is reduced.

We as insurance brokers, will continue to monitor and assess changes as they develop to ensure our clients are as informed as possible. With this, we will work with our insurer partners to maintain the market leading Professional Indemnity policies, keeping them as comprehensive and cost competitive as possible.

 

Further Information

We welcome any questions from Building Designers with regards to Combustible Cladding issues or other insurance and risk related matters.

We can be contacted as follows:

Phone 1300 932 237

Email

Chris Webber – chris@webberinsurance.com.au

Daniel Webber – daniel@webberinsurance.com.au

 

To obtain a quote for Building Designer Insurance, please visit

www.webberinsurance.com.au/building-designer-insurance

For more information as to Building Designer insurance requirements, please visit www.webberinsurance.com.au/building-designer-insurance-guide