Shaping the future of residential construction liability in New Zealand

Why the Building Amendment Bill matters

Under the current joint and several liability model, local councils often bear the financial burden when other parties cannot cover costs for defective work. This imbalance has led to risk aversion, consent delays, and increased costs - frustrating homeowners and industry professionals alike.

The proposed shift to proportionate liability will ensure each party is responsible only for its share of the work and subsequent liability.

Key highlights

• Fairer liability – Ending the era of councils as the “ambulance at the bottom of the cliff.”
• Consumer protection – Mandatory home warranty insurance for new builds and major renovations, including a 10-year structural guarantee and one-year defect coverage.
• Higher standards – Mandatory Professional indemnity insurance for architects and engineers (importantly, this requirement does not extend to builders); tougher penalties for licensed building practitioners of maximum fines increasing from $10,000 to $20,000 and/or suspension periods extended from 12 months to 24 months.

Current observations and strategic outlook

At present, the New Zealand design sector—comprising architects and engineers—already demonstrates strong adoption of Professional Indemnity coverage.

The building sector, however, is expected to experience a more significant impact due to the proposed mandatory inception of a 10-year warranty policy (which includes one year of defects coverage) for residential properties up to three storeys and renovations exceeding $100,000.

Next steps

Willis will continue to monitor developments closely. Once the proposed Bill is released, Willis will review the proposed legislation and engage with stakeholders on how we can provide tailored insurance solutions to meet their needs.

What’s your perspective?

Do you believe these changes will create a fairer, more accountable industry—or introduce new barriers for smaller players? How should builders, architects, and insurers prepare for this shift?