It is expected that both the mandatory DLI and voluntary DLI options will change the way insurers and the building industry operate in NSW.

The key impacts include:

• the proposed insurance probity checks involved with DLI will mean high-risk builders and developers are less likely to be offered DLI
• builders and developers will therefore be encouraged to build safer buildings that are defect free and be rewarded through lower premium rates
• homeowners will have enhanced protections beyond what is currently available through SBBIS.

Under the options for mandatory or voluntary DLI, the timeframe for insurers to pursue at-fault parties (for example, builders, developers or architects) will be extended by 24 months from the date of the insurance claim. This will mean that at-fault parties will potentially be exposed to claims for an additional two years and will need to update their record-keeping processes and protections to reflect this. This change aims to reduce the risk for insurers by allowing them to take action to recover their loss against the at-fault party when a claim is made towards then end of the life of the cover.