Building Amendment Bill seeks to introduce mandatory home warranties, proportionate liability for defective building work, and PI insurance requirements
The Building Amendment Bill passed its first reading in Parliament on 30 June 2026, proposing significant reforms to New Zealand’s building liability and consumer protection framework. The Bill amends the Building Act 2004 to shift from joint and several liability to proportionate liability for defective building work. The Bill also introduces mandatory home warranties and compulsory professional indemnity (PI) insurance for design professionals.
Several of the proposed changes will be of particular interest to insurers, brokers and underwriting agencies operating in the construction and professional indemnity sectors.
Move to Proportionate Liability
A significant legal reform proposed by the Bill is the replacement of the current joint and several liability framework with proportionate liability for defective building project work.
Under a proportionate liability regime, each party involved in a building project will be responsible only for the proportion of loss that reflects their contribution to the defect or failure.
The new liability framework will apply where multiple parties contribute to defective building project work, and a claim is pursued through litigation, adjudication or arbitration.
Importantly, proportionate liability will apply only to building project work where the building consent is issued on or after the first anniversary of Royal Assent.
This change is expected to have material implications for risk allocation across the construction sector and may influence future underwriting and claims outcomes.
Mandatory Home Warranties
The Bill introduces mandatory residential home warranties for:
- New homes;
- Multi-unit residential buildings up to 10 metres in height; and
- Residential renovations valued at $100,000 or more where the work involves restricted building work and requires a building consent.
Warranty products will be required to provide minimum cover of:
- At least one year for defective building work; and
- At least 10 years for structural defects.
The Bill also establishes a registration regime under which warranty providers must be registered with the Ministry of Business, Innovation and Employment (MBIE). The register will be publicly available including the names and contact details of registered home warranty providers and persons whose registration as a provider is suspended.
The proposed framework is intended to strengthen consumer protection and provide homeowners with greater certainty in the event of defective building work.
Mandatory Professional Indemnity (PI) Insurance
The Bill also introduces mandatory PI insurance requirements for design professionals involved in building projects.
The requirement will apply to professionals who contribute to the design or compliance of building work through advice or other services, including architects, designers, engineers; and surveyors.
Further detail on minimum insurance requirements is expected to be developed through regulations.
The proposal represents a significant change for the professional services market and is likely to increase demand for PI insurance products across the building and construction sector.
Power to temporarily suspend warranty and insurance requirements
Recognising the potential for market disruption, the Bill provides a mechanism for the Governor-General, on the recommendation of the Minister for Building and Construction, to temporarily disapply some or all home warranty and professional indemnity insurance requirements.
This power may be exercised where there is, or is likely to be, a material impact on the availability or affordability of these products. Examples could include insurer withdrawal, severe market disruption, or circumstances that may adversely affect housing delivery or continuity within the building sector.
Building Sector Funding Changes
The Bill also proposes changes to building research funding arrangements by combining the Building Levy and Building Research Levy and introducing contestable funding.
Implementation timeframes
The mandatory home warranty, professional indemnity insurance and proportionate liability provisions will come into force one year after the Bill gets Royal Assent.
This implementation period is intended to provide time for insurers, warranty providers, brokers, construction professionals and regulators to prepare for the new regime.
What this means for brokers
The proposed reforms are expected to increase demand for both home warranty and professional indemnity insurance products. Brokers will have an important role in helping builders, developers, architects, engineers and other design professionals understand and meet the new requirements.
The shift to proportionate liability may also influence insurer pricing, coverage terms and underwriting appetite, making it important for brokers to stay informed as the reforms progress and the insurance market responds.
Next steps
The Bill has been referred to the Infrastructure and Transport Select Committee for consideration. A due date is yet to be set for submissions and is likely to close in November 2026.
IBANZ intends to make a submission on the proposed reforms. Members who would like to be involved in the submission process, or who wish to review a draft of the submission, are encouraged to contact Chief Executive, Katherine Wilson.
Read the bill