NSW Passes Final Bill for 10-Year Apartment Defect Insurance

Short summary

The NSW Government announced on 6 August 2026 that Parliament had passed the Fair Trading and Building Legislation Amendment Bill. The government describes it as the final legislative groundwork needed to bring decennial liability insurance, or DLI, to the NSW apartment market.

DLI is intended to cover the cost of rectifying serious defects in apartment-building common property for 10 years. The policy is taken out for the building and is intended to remain with it if the developer or builder stops trading.

This is a rollout step, not evidence that every NSW apartment building is already insured. Building Commission NSW still needs to assess prospective policies, and a buyer must check the actual contract, strata records and insurance documents for the building.

What changed on 6 August

The newly passed bill completes another part of the legal framework for DLI. The NSW announcement says insurers can now seek review and endorsement of policies so they can be brought to market.

Building Commission NSW will work with prospective providers to assess whether policies align with the legislative requirements and are fit for purpose.

The same bill also gives NSW Fair Trading and Building Commission NSW stronger licensing and disciplinary powers across property, conveyancing and private certification. Those changes are separate from the DLI cover itself.

What decennial liability insurance is designed to do

Decennial means 10-year. Under the NSW framework, the developer arranges the policy in favour of the owners corporation. It is designed to respond to serious defects in relevant building elements of common property without first requiring owners to prove negligence by the developer or builder.

That distinction matters for an apartment building. Structural and common-property defects can affect many owners at once, while the responsible company may no longer be trading by the time a problem appears.

The NSW Government says a DLI policy stays with the building. It is not a personal policy that disappears when an individual apartment is sold.

What the announcement does not confirm

The passage of the bill does not confirm:

• that every new apartment project has a DLI policy;
• that existing buildings are automatically covered;
• that a particular insurer or policy has been endorsed;
• that every defect, finish or appliance is covered;
• that a claim will be accepted without checking the policy terms; or
• that other defect rights and time limits can be ignored.

The ministerial release did not give a universal commencement date or approved-provider list. Buyers should treat those as building-specific questions until the regulator publishes further rollout details.

What apartment buyers can check

For a new or off-the-plan apartment, ask the conveyancer or solicitor to identify:

1. whether the project has, or is expected to have, a DLI policy;
2. the insurer and policy document;
3. the building elements, exclusions and commencement date;
4. the insured building and owners corporation details;
5. the claims process and evidence requirements;
6. whether any defects, orders or rectification work are already recorded; and
7. how the policy interacts with statutory warranties and other contract rights.

Do not rely on a sales brochure saying the project has 10-year protection. Ask for the actual documentation and have it reviewed.

The pre-settlement inspection checklist can help with the final condition check, but it does not replace a building inspection, strata-record review or legal advice.

Worked buyer scenario

Suppose a buyer is considering a new NSW apartment advertised as having DLI.

The useful next step is not to add a dollar allowance to the purchase price. The buyer should obtain the policy information, confirm the insured building and start date, and ask what serious common-property defects fall within the cover.

The buyer should separately review the strata report, building notices, defect history, capital-works planning and contract. A DLI policy may provide an additional protection, but it does not establish that the building has no defects or that every future repair will be insured.

Use the Property Purchase Cost Calculator for transfer duty, legal, inspection and moving-cost estimates. It does not price defect risk or insurance coverage.

Why this matters now

The government said more than 75,000 homes were under construction across NSW when it announced the bill's passage. A large apartment pipeline makes the quality and remedy framework relevant to buyers, owners corporations, developers and insurers.

That figure is construction context, not a count of buildings with DLI and not a forecast of completed apartments.

What remains uncertain

The practical effect depends on endorsed policies reaching the market, developers taking them out and the wording applying to each building. Regulations, regulator guidance and policy documents may add detail after this article's publication.

No RealEstateCalc formula changed because of the bill. It affects contract and insurance checks, not stamp duty, mortgage repayments or purchase-cost arithmetic.

Related calculators and guides

• Property Purchase Cost Calculator
• Stamp Duty Calculator
• Pre-Settlement Inspection Checklist
• Body Corporate Fees Explained
• Strata vs Freehold Property

Sources

• NSW Government: Final legislative groundwork for 10-year defects insurance, published 6 August 2026 and checked 7 August 2026.
• NSW legislation: Strata Schemes Management Act 2015, Division 3AA, checked 7 August 2026.
• NSW Government consultation: Decennial liability insurance, checked 7 August 2026.

General information disclaimer

This article provides general information only. It is not legal, insurance or property advice. Passage of the bill does not mean every apartment building has a DLI policy. Coverage, commencement, exclusions and claims rights depend on the law and the policy issued for the building. Check the contract, strata records and insurer documents, and speak with a qualified conveyancer, solicitor or insurance professional.

Last updated: 7 August 2026.