Defective Premises Act limitation and your PI cover

The limitation change, stated plainly

Section 135 of the Building Safety Act 2022 inserted a new section 4B into the Limitation Act 1980. It came into force on 28 June 2022.

For a claim under section 1 of the Defective Premises Act 1972 where the right of action accrues on or after 28 June 2022, the limitation period is 15 years from accrual. Where the right of action accrued before 28 June 2022, the period is 30 years. The retrospective element is the striking part: it revived exposure to work that most practices had long since treated as historic.

Section 1 of the Defective Premises Act 1972 imposes a duty on those taking on work in connection with the provision of a dwelling to see that the work is done in a workmanlike or professional manner, with proper materials, so that the dwelling is fit for habitation when completed. It bites on residential work. That is why practices whose portfolios include housing, flats, conversions and mixed-use schemes with dwellings above are the ones feeling this most.

In URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21 (21 May 2025) the Supreme Court held that the extended periods are not limited to claims pleaded under the Defective Premises Act itself — they extend to negligence and contribution claims that depend on those time limits. The practical reach is therefore wider than the section number suggests.

What a long-tail claim against a current policy looks like

Consider the shape of it, without inventing numbers. A residential scheme completed a long time ago develops a problem. The building owner or developer investigates, carries out remedial works, and then looks for recovery. It approaches the parties involved in the original design and construction, several of whom are small practices that have changed size, ownership, insurer and sometimes name since.

Each of those practices notifies its current professional indemnity policy, because that is how claims-made cover works. The claim is then assessed against the current wording. Three things commonly go wrong at that moment.

First, exclusions. A fire safety, cladding or external wall system exclusion added to the policy years after the work was completed applies to the claim if the claim falls within its terms. The practice bought cover every year without a break and still finds the specific issue is carved out.

Second, the limit of indemnity. The limit is the one on the current policy, which was probably set by reference to current turnover and current appointments — not by reference to the value of a building designed years ago. Aggregate limits and defence-costs-inclusive wordings make this sharper still.

Third, records. On a fifteen or thirty year horizon, the defence often turns on what the practice can prove about scope, instructions, warnings given and decisions taken by others. Documents that were never systematically archived are the difference between a defensible position and an indefensible one.

Why run-off cover has become a much bigger question

Run-off cover is professional indemnity insurance maintained after a practice stops trading, so that claims made in later years still have a policy to attach to. It has always mattered. Against a liability period that can run for many years after the work, it matters far more.

For a sole practitioner or small partnership planning retirement, this is now a financial planning question rather than an administrative one. How many years of run-off will be maintained? Who pays for it — the retiring principals, the practice, or an acquirer? What happens to the limit as the years pass? What happens if the run-off market for construction risks hardens further? None of these have automatic answers, and the worst time to ask them is at the point of closing the practice.

For a practice being sold or merged, the treatment of prior acts is a deal point. Whether the acquiring entity’s policy picks up the prior acts of the acquired practice, and on what terms and exclusions, should be established before completion rather than assumed.

Presenting a long-tail construction risk properly

There is a version of this conversation that goes badly: a proposal form that asks about residential and high-rise work, a hurried tick, and a renewal priced for a risk the practice does not actually run. There is also a version that goes well.

The version that goes well involves being able to describe the practice’s historic portfolio with some precision — what proportion was residential, what building heights, what element of the work was external envelope, whether the practice ever specified or approved cladding systems, and what its role actually was on projects where others led. It involves being able to say what records exist and for how far back. And it involves being honest about the parts of the history that are unclear, because underwriters price uncertainty, and a practice that has looked properly usually has less of it than one that has not.

That is the work a broker should be doing with you. It does not remove exposure. It does change the terms on which the market will look at you.

Frequently asked questions

What limitation period applies to Defective Premises Act claims now?

Section 135 of the Building Safety Act 2022 inserted section 4B into the Limitation Act 1980 with effect from 28 June 2022. For section 1 Defective Premises Act 1972 claims accruing on or after that date the period is 15 years from accrual; where the right of action accrued before that date, the period is 30 years. This is general information about the legislation and not legal advice on any particular claim.

Does my old PI policy respond to an old claim?

No. Professional indemnity is claims-made, so the policy that responds is the one in force when the claim is first made against you and notified, not the one in force when the work was done. Expired policies do not come back into play, which is why continuous cover and, after closure, run-off cover matter so much.

How long should a retiring practice keep run-off cover?

There is no single right answer, and it should be a deliberate decision rather than a default. It depends on what the practice worked on, how much of it was residential, what contractual obligations the appointments impose, and what the principals are prepared to fund. Given the length of the liability period, this is worth planning years before retirement rather than in the final month.

Did URS v BDW change what my PI insurer will cover?

It did not change any policy wording directly, but it clarified the legal exposure that PI policies sit behind — confirming that the extended limitation periods reach negligence and contribution claims, that the Defective Premises Act duty can be owed to a developer, and that a party which has carried out remedial work can pursue contribution without first obtaining a judgment. A wider legal exposure tends to show up in underwriting questions and wording rather than in cover being withdrawn overnight.

This page is insurance information for UK businesses, not legal or regulatory advice. It describes how the Building Safety Act landscape is affecting professional indemnity cover and what underwriters are asking; it does not tell you how to comply with the legislation. For advice on your duties under the Act, take specialist legal advice. Position stated as at August 2026.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.