Do Builders Really Need Professional Indemnity Insurance? Here's How to Decide

“Do I need Professional Indemnity insurance as a builder?”

It’s one of the most common questions we get. And the answer isn’t a simple yes or no.

Some builders absolutely need PI. Others don’t. And many builders who think they’re fine without it are actually carrying significant uninsured risk.

Here’s how to work out where you sit.

First: What Does Professional Indemnity Actually Cover?

Before we get into whether you need it, let’s be clear on what it does.

Professional Indemnity Insurance protects you when a client claims your professional advice or services caused them financial loss. It’s not about physical accidents (that’s Public Liability) - it’s about your professional judgment.

For builders, this typically means:

• Design advice and specifications
• Material recommendations
• Project management decisions
• Coordination of design consultants

If a client says “your advice cost me money,” PI is what responds.

The Key Question: Do You Provide Professional Advice?

Here’s the simple test. Ask yourself:

Do you do anything beyond just building to someone else’s plans?

If you:

• Draft your own designs
• Modify or amend existing plans
• Specify materials or construction methods
• Give advice on design matters
• Coordinate design consultants
• Sign off on work or provide certifications

…then you’re providing professional services. And you probably need PI insurance.

If you truly only build exactly to plans and specifications provided by someone else, with zero design input and zero professional advice, you might not need it. But be honest with yourself - most builders do at least some of the above.

The Different Types of PI for Builders

Here’s where it gets important. Not all Professional Indemnity insurance is the same.

Standard Professional Indemnity (for accountants, consultants, IT professionals) often excludes manual work and construction activities. If you’re a builder with standard PI, you might not actually be covered for claims arising from your construction projects.

Design and Construct Insurance (also called D&C Insurance or Builders PI) is specifically designed for construction professionals who combine professional advice with physical building work. This is usually what builders need.

The difference matters. We’ve seen builders with standard PI find out at claim time that their policy doesn’t cover construction-related professional services.

If you’re a builder who does any design work, D&C Insurance is almost certainly the right product - not standard PI.

When PI is Definitely Required

Some situations make the decision easy:

Contract Requirements

Many commercial contracts explicitly require Professional Indemnity insurance. If you want to bid on certain work, you need the cover. End of discussion.

Regulatory Requirements

In NSW, the Design and Building Practitioners Act is making PI insurance mandatory for certain building practitioners from July 2026. If you do design work on Class 2 buildings in NSW, you may need to hold PI insurance to maintain your registration.

Read more about NSW requirements

D&C Contracts

If you take on design-and-construct contracts where you carry design responsibility, you’re taking on professional liability. D&C Insurance is essential.

Engaging Design Subcontractors

If you engage engineers, architects, or other design consultants and take overall design coordination responsibility, you need cover for vicarious liability - their mistakes could become your problem.

When PI Might Not Be Necessary

Some builders genuinely don’t need PI:

• You only work as a subcontractor to other builders
• You strictly install to designs provided by others
• You make zero design decisions or recommendations
• Your contracts don’t require it
• You’re in a pure trade role with no advisory element

But be careful here. “I just build what I’m told” often doesn’t hold up under scrutiny. Do you ever suggest alternative materials? Advise on construction approaches? Make decisions on site that affect the design outcome?

If yes, you’re providing professional services - even if you don’t think of it that way.

The Decision Framework

Here’s a simple framework:

If you…	You likely need…
Only build to others’ plans, zero design input	Public Liability + Contract Works
Modify plans or provide specifications	D&C Insurance
Do full design-and-construct work	D&C Insurance
Coordinate design consultants	D&C Insurance
Work on NSW Class 2 buildings with design input	D&C Insurance (likely mandatory from July 2026)

What If You’re Still Not Sure?

Here’s the practical approach:

Think about what could go wrong. If a client could plausibly claim your advice or design decisions caused them financial loss, you should have PI cover.

Review your contracts. Do any require PI? Do you take design responsibility anywhere?

Be honest about your work. Do you really make zero design decisions? Most builders, when they think about it, realise they do provide some professional advice.

Talk to a specialist broker. We can review your situation and give you a straight answer. If you don’t need D&C Insurance, we’ll tell you. We’d rather you have the right cover than sell you something unnecessary.

The Bottom Line

Professional Indemnity insurance isn’t automatically required for every builder. But the threshold for needing it is lower than many builders realise.

If there’s any design element to your work - and for most builders, there is - you should have appropriate cover. And for builders, “appropriate cover” usually means Design and Construct Insurance, not standard PI.

Still not sure? Get in touch and we’ll help you work it out. No hard sell - just straight advice on what you actually need.

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Related reading:

• Design and Construct Insurance - detailed guide to D&C Insurance
• D&C Insurance vs Professional Indemnity - understanding the differences
• NSW PI Requirements for Builders - regulatory requirements and compliance guide