The Building Safety Act 2022 and PI Insurance

The single most important thing the Building Safety Act 2022 did to professional indemnity insurance was extend the limitation tail to thirty years — and the PI market is still adjusting to it four years on.

The Act was Parliament’s response to Grenfell and the cladding crisis that followed. It restructured how higher-risk buildings are designed, built and managed, and it rewrote the limitation rules for defective dwellings. For any construction professional — architect, engineer, building surveyor, principal designer, contractor with a design role — the Act materially increased the duration, scope and severity of professional indemnity exposure. The underwriting response has been a hard market for construction PI that has not yet fully softened, with restricted aggregates, fire safety exclusions, and renewed scrutiny of work undertaken since the late 1990s. This guide sets out what the Act actually changed, how PI policies respond, and what to focus on at your next renewal.

What this means in practice

The Building Safety Act 2022 made three changes that drive PI exposure. First, section 135 extended the limitation period under the Defective Premises Act 1972 from six years to thirty years retrospectively for completed works, and to fifteen years prospectively for work completed after 28 June 2022. That single provision reopened the door to claims for work done on dwellings as far back as 1992. Second, section 130 introduced building liability orders, allowing a court to pierce the corporate veil and pin liability on an associated company where the original entity is insolvent or being used to defeat a claim. Third, the Higher-Risk Buildings regime created a new dutyholder structure — Principal Designer and Principal Contractor with explicit competence and gateway obligations — for buildings of 18 metres or seven storeys with at least two residential units.

These changes show up across a construction PI book in three ways. The first is notification volumes on historic projects. Firms that thought their 2005 cladding spec was time-barred discovered, after the Act came into force, that it was not. The second is on-cover capacity. Underwriters now ask searching questions about historic dwelling work, even from firms whose current book is purely commercial. The third is in policy terms. Fire safety, cladding and combustible materials exclusions are now standard in many construction PI wordings; aggregate limits with sub-limits for fire safety risks have become common; and run-off pricing has hardened on the assumption that exposures simply do not run off in any meaningful sense for thirty years.

The Supreme Court’s decision in URS Corporation Ltd v BDW Trading Ltd [2025] UKSC confirmed that a developer can recover from a consultant under the Defective Premises Act 1972 even where the developer has voluntarily remediated and is not itself the dwelling owner. That decision broadens the universe of claimants that can reach back to a designer.

How the cover usually responds

Professional indemnity cover responds to a claim when (a) a claim is first made against the insured and notified during the period of insurance, and (b) the claim arises from the insured’s professional activities. The trigger is the claim, not the original act. A defective design from 2003 that is first notified in 2026 is a claim against the 2026 policy, subject to the insured having held continuous cover and not having known of the circumstance earlier — which would trigger a duty of fair presentation under section 3 of the Insurance Act 2015.

For dwelling work, the underlying liability now potentially runs for thirty years on retrospective exposures by virtue of the Building Safety Act 2022, section 135, operating on the Defective Premises Act 1972, section 1. This drives three policy-level questions that need a clear answer at every renewal:

• Does the policy contain a fire safety, cladding or combustible materials exclusion, and if so how is “fire safety” defined? Definitions vary widely between insurers.
• Is the limit of indemnity each-and-every claim or in the aggregate, and does an aggregate apply specifically to fire safety claims? Aggregated cover on a long-tail risk runs out faster than buyers expect.
• Are defence costs inside or outside the limit? Inside-the-limit defence costs on a building liability dispute can consume seven-figure capacity before the substantive claim is even reached.

RICS-regulated firms remain subject to the RICS Minimum Approved Wording, which restricts how far cover can be cut back for fire safety and limits aggregation in some respects, but the floor it sets is not a cure-all. ARB-regulated architects are subject to the Architects Code, which requires adequate and appropriate PI but does not prescribe wording. Run-off cover under the RICS regime is mandatory for six years on cessation — a period that no longer aligns with the underlying liability tail.

Common mistakes

1. Treating historic dwelling work as time-barred because the original six-year contractual limitation has expired — the Defective Premises Act 1972 was always a separate cause of action and is now a thirty-year one.
2. Assuming a fire safety exclusion only bites on cladding — many wordings extend to compartmentation, fire stopping, means of escape and any breach of fire safety regulations, which is a far broader carve-out.
3. Letting an aggregate limit apply across all claims in the year without checking whether a single building safety incident could exhaust the aggregate and leave the firm bare for everything else.
4. Switching insurer without confirming the retroactive date — a “new” policy with a retroactive date set at inception leaves a thirty-year tail uninsured.
5. Not notifying circumstances early enough. Any letter referencing fire safety, EWS1 deficiencies or remediation contribution should be treated as a circumstance and notified under section 3 of the Insurance Act 2015 on a fair presentation basis.

Worked example

A mid-sized architectural practice, ten partners, specialises in mid-rise residential. It carries £10m aggregate PI with defence costs in addition. In 2024 it receives a pre-action letter from a developer that has remediated a 2008 residential scheme under the cladding remediation framework. The developer seeks £4.2m in remediation contribution and £1.1m in associated losses. The practice notifies its current insurer. The 2024 insurer accepts the notification on the basis the claim is first made in 2024 and the practice has maintained continuous cover with the same retroactive date since 1998.

Defence costs alone in the first eighteen months reach £600,000. The substantive claim settles at £3.1m, well within the aggregate limit. But because the policy includes an aggregate fire safety sub-limit of £5m, and a second remediation claim from a different building has already been notified, the practice now has only £1.9m of fire safety aggregate left for the remaining policy year. At the next renewal the insurer offers terms only with a £3m fire safety sub-limit and a higher self-insured retention. The practice approaches the wider market to test capacity rather than accepting the incumbent’s offer.

What to do at renewal

Start the renewal twelve weeks out, not six. The submission needs to address the thirty-year question head-on. Underwriters expect to see:

• A clear statement of historic exposure to residential and Higher-Risk Building work, with rough fee or project counts by decade.
• An EWS1 register if the practice’s work has been the subject of any external wall assessment, with status notes.
• A circumstance log showing what has and has not been notified, dated and reasoned.
• Confirmation of retroactive date and continuity of cover, with broker letters or schedule extracts evidencing it.
• A current position on fire safety, cladding, combustible materials and compartmentation exclusions in the existing wording, with proposed alternative language if you intend to push back.

Ask your broker to canvass the market, including specialist construction PI insurers and the Lloyd’s market, not only the incumbent. Test whether a higher each-and-every limit with a sub-limited aggregate works commercially better than a single aggregate. If the firm is reducing its residential exposure prospectively, document that and price the run-off on the historic book separately.

Apex’s view

Apex’s view: The market has priced the thirty-year tail into renewal terms but is still inconsistent on how it words the fire safety carve-out. We have seen identical risks placed within two months at materially different terms because one underwriter ran “fire safety” narrowly to mean external wall construction and another ran it to mean anything within Part B of the Building Regulations. If your broker is not testing the wording as hard as the price, you are leaving cover on the table. We continue to advise any practice with material historic residential exposure to assume the tail is real and to treat run-off as a thirty-year planning question, not a six-year one.

See also

• Building Safety Act 2022: PI Insurance Implications
• The Defective Premises Act 1972 and PI
• Principal Designer Liability Under the Building Safety Act
• Building Safety Act 2022
• Architects PI

Sources

1. Building Safety Act 2022, sections 130 and 135
2. Defective Premises Act 1972, section 1
3. Limitation Act 1980, sections 1, 14A and 14B
4. Insurance Act 2015, sections 3, 8 and 11
5. RICS Professional Indemnity Insurance Minimum Approved Wording
6. Architects Registration Board Code of Conduct and Practice
7. URS Corporation Ltd v BDW Trading Ltd [2025] UKSC