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As part of the NSW Building Commissioner’s ever continuing reforms to the building industry, David Chandler OAM is now driving a new agenda, seeking to now implement an insurance system to protect residential unit owners.

New South Wales will be the first state to implement the Decennial Liability Insurance (DLI), which requires builders and developers to take out insurance for future defect rectification. The reform is to afford owners a 10-year major defect insurance policy for residential apartment buildings and complexes.

In Summary, the reform seeks that:

  1. DLI will replace the Strata Building Bond.
  2. DLI is to be obtained between DA Approval and the issue of the first Construction Certificate, with the entire premium to be paid upfront.
  3. DLI will be effective for 10 years from the date of issue of the Occupational Certificate (upon building completion).
  4. A residential Strata will be able to lodge a claim for major defects against the DLI insurance for assessment within 10 years.

It is intended that the DLI will provide effective safeguard measures and protection to owners and buyers of new apartment buildings and complexes to reduce the associated risk and length of time involved with expensive litigation against developers and builders in chasing remediation of defective works or compensation when a building company or developer subsequently folds. DLI will cover major defects such as waterproofing, fire safety, and structural defects for 10 years after building completion. The Government’s Advisory Panel overseeing the initiative has proposed two models- mandatory or voluntary decennial liability insurance (DLI). 

 The proposal is yet to be formally approved by regulatory bodies – watch this space.


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