Design and Construct Insurance*
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What Is Design and Construct Insurance?*
Design and Construct (D&C) Insurance — also known as Design and Construct Professional Indemnity Insurance — provides protection for construction professionals who take responsibility for both design and physical build or installation work.
Unlike standard Professional Indemnity cover, which is intended for consultants who provide advice only, D&C Insurance recognises that many builders and contractors now combine design, engineering, and project delivery.
It helps protect your business against financial loss arising from design errors, faulty specifications, inaccurate advice, or construction-related mistakes for which you may be held legally liable.
What Does Design and Construct Insurance Cover?*
Design and Construct policies are tailored for contractors exposed to both professional and physical risks. Coverage may include:
Civil Liability
Protection against claims resulting from a breach of professional duty during design, documentation, or project management.
Faulty Design or Inaccurate Advice:
Covers losses arising from design mistakes or technical errors, including those by subcontractors.
Breach of Consumer Legislation
Protection against alleged breaches of Australian Consumer Law or equivalent legislation.
Breach of Intellectual Property (Unintentional)
Cover for accidental infringement of design, plans, or drawings.
Contractual Liability
Coverage for liability assumed under contract, such as fitness-for-purpose or performance warranties.
Fraudulent or Dishonest Acts
Protection for losses caused by dishonest acts of employees (provided you are not personally involved).
Mitigation Costs
Reasonable expenses incurred to prevent or reduce a potential claim.
Loss or Damage to Documents
Includes project files, drawings, and electronic records.
Defence and Inquiry Costs
Legal costs associated with responding to a claim, tribunal, or regulatory inquiry.
Policies can provide limits of up to $20 million, as offered by some insurers such as Berkley Insurance Australia, and are available to a wide range of businesses including builders, fit-out contractors, electrical and HVAC trades, landscapers, and some manufacturers
Who Needs Design and Construct Insurance?*
Design and Construct Insurance is suitable for:
- Builders or head contractors involved in both design and construction
- Contractors who engage consultants or subcontractorsfor design or engineering work
- Trades such as electrical, HVAC, or fit-out contractors who provide design input or advice
- Developers, design-build firms, and project managers overseeing both design and delivery
Many contracts — particularly government and commercial projects — require Design and Construct Professional Indemnity Insurance. Even if you subcontract all design work, you can still be held responsible for the actions of those designers under your contract.
Common Claims Examples*
Real-world examples demonstrate how easily D&C exposures can arise:
- Survey data error: A building contractor relied on incorrect survey data supplied by a consultant. The error led to misaligned foundations and structural changes costing more than $500,000 to rectify.
- Outdated drawings: A pool builder used outdated plans from a designer, resulting in the pool being built above the approved level and causing runoff issues. The total rectification and legal costs exceeded $60,000.
- Consultant design oversight: A contractor relied on engineering drawings later deemed non-compliant. The project was delayed, and redesign and defence expenses reached several hundred thousand dollars.
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These examples are illustrative of common market scenarios. Actual coverage and outcomes depend on the specific policy terms and circumstances.
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Frequently Asked Questions
Standard Professional Indemnity (PI) insurance is designed for consultants such as architects, engineers, or designers who provide advice or design services only. It covers financial loss arising from professional negligence, error, or omission in the course of that work.
Design and Construct Insurance extends this protection to contractors who also perform or supervise physical construction, installation, or fabrication. It covers both professional advice and construction-related exposures, recognising the integrated nature of modern projects.
Importantly, many standard PI wordings do not contemplate, or may exclude, claims arising from physical works or the supply of goods — such as construction, installation, repair, or servicing activities.
This means that if your business is involved in any aspect of building or product installation, a standard PI policy may leave significant coverage gaps.
Design and Construct Insurance bridges this gap by combining professional indemnity and construction-related liability into one comprehensive policy
If your business undertakes both design and construction — or engages consultants for design or engineering work — you may require D&C cover. It helps protect against claims for design errors, professional negligence, or specification issues that can arise even when the physical work complies with the contract.
Possibly. Even if you don’t directly charge for design services, you can still be held responsible for design work completed by subcontractors or consultants you engage.
If you distribute or approve designs, coordinate consultants, or provide drawings as part of your service, you may still be exposed to professional liability. D&C insurance can provide protection for this indirect risk.
In New South Wales, registered design and building practitioners are required to hold professional indemnity insurance (PII) under the Design and Building Practitioners Act 2020 and Regulation 2021.
The NSW Government has extended the PII exemption until 30 June 2026. From 1 July 2026, all registered building practitioners must hold PII that is adequate for the nature and risks of their work. This includes any activities where professional liability could arise from design, coordination, or construction.
The legislation does not set a fixed minimum sum insured. Instead, practitioners must assess whether their policy provides adequate protection and may be asked to demonstrate that this assessment has been made.
For contractors operating under Design and Construct contracts, this generally means maintaining a Design and Construct Professional Indemnity policy that extends cover to both design and construction liabilities.
SMART Business Insurance can assist in arranging D&C cover that supports compliance with NSW legislative and contractual requirements.
Protecting Every Project with Design and Construct Insurance
Design and Construct Insurance helps protect builders and contractors who take on both design and construction responsibilities. It provides financial protection for professional errors, subcontractor mistakes, or contractual liabilities that can arise during design, documentation, or delivery.
Working with SMART Business Insurance gives you access to insurers experienced in construction-sector risks — including Berkley Insurance and other specialist underwriters — helping you secure cover suitable for your projects and obligations.
Compliance Notice: SMART Business Insurance provides general advice only and does not take into account your objectives, financial situation, or needs. You should consider the relevant Product Disclosure Statement (PDS) before making a decision.