Decennial liability insurance could create systemic change around apartment defects in the ACT, owners and experts say

NSW will be the first Australian jurisdiction to introduce decennial liability insurance, a product designed to give home owners comprehensive cover for building defects.

Under the scheme, NSW developers or builders would take out a policy to cover any potential costs to fix serious defects of critical building elements for up to 10 years.

This includes defects with a building's structure, fire safety systems and waterproofing.

An ACT government spokesperson said the insurance scheme is not currently a priority for the territory, but one it is monitoring.

"While apartment defect insurance is not currently identified as part of the ACT reforms, we will continue to monitor the NSW experience and consider this in relation to the ACT system," the spokesperson said.

"The ACT government will be reviewing residential building insurance settings as part of ongoing future work programs."

The spokesperson said the government is committed to other initiatives to provide consumer protections when it comes to building quality.

Currently in the ACT, the Building Act provides a statutory warranty for work on residential buildings for six years regarding structural elements and two years for non-structural elements.

Shelley Mulherin, president of the Strata Community Association's ACT chapter and partner at law firm Thomson Geer, has been acting in strata law and building litigation for more than a decade.

She said litigation often occurs when builders or developers do not attend to the rectification of defects.

"Litigation can of course be a very difficult road for owners corporations, who will likely be funding that action by raising levies from owners," she said.

"I expect the ACT is likely to see an increase in litigation between owners corporations and builders as a number of more complex (multi-use) buildings in the ACT approach the end of their statutory warranty periods," she said.

Ms Mulherin said conceptually, a decennial insurance policy in the ACT would be welcomed by the Strata Community Association.

"For owners buying into decennially insured buildings, they would have the added advantage of the insurer's assurance that they are covered, for that period, in relation to genuine defects and regardless of the builder's attitude to the same and regardless of whether the builder remains able or willing to rectify the works," she said.

However, she said the terms of any policy, such as the cost and how it would be shared between parties, would need close examination.

"At this stage it is not clear whether there would be an insurer willing to offer a decennial liability insurance product [in the ACT] and what the cost of that might be," she said.

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Gary Petherbridge, president of the Owners Corporation Network ACT, said the territory should "absolutely" follow NSW's lead in introducing decennial liability insurance.

However, he said mitigating the risk of defects was an even more pressing issue for the ACT.

"It is even more important to minimise defects and poor development of residential apartment buildings in the first place so claims against insurance occur less often and premiums and costs to the developers do not escalate," he said.

The NSW government's decision to appoint a building commissioner with statutory authority and launch a developer rating system could also be mirrored in the ACT, Mr Petherbridge said.

Najam Us Saqib believes a 10-year defect insurance would create "systemic change" in the ACT.

Mr Us Saqib and his family have been dealing with defects and building noises in their apartment in the Symphony Park complex in Harrison since 2018.

He said the building issues have caused him and his wife, along with their two young children, immense stress over the years.

Legal proceedings are currently underway between Symphony Park Apartments and its builder, PBS Building.

Building reform is something Mr Us Saqib has raised with several ACT ministers, he said.

"I think people's feedback should be taken seriously and regulatory organisations such as Access Canberra need to lift up their game," he said.

He said a 10-year cover would give future ACT home buyers added security when purchasing.

"It will also provide [builders] an assurance having an insurance to go to and I think it will create a systemic change and that's what the ACT needs," Mr Us Saqib said.

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