The Defective Premises Act 1972 and PI

The Defective Premises Act 1972 was a quiet statute for fifty years; the Building Safety Act 2022 turned it into the single most important piece of construction liability law in the United Kingdom.

The Act has always imposed a duty to do work on a dwelling in a workmanlike or, as the case may be, professional manner so that the dwelling is fit for habitation when completed. What changed in 2022 is the limitation period. Building Safety Act 2022, section 135 extended that period to thirty years retrospectively and fifteen years prospectively, reopening claims on dwelling work going back to 1992 and putting any current dwelling work into a fifteen-year liability window. The professional indemnity market has spent four years adjusting. This guide sets out who the Act bites, how the PI policy responds, and how aggregation works when one design defect triggers claims across multiple flats in one building.

What this means in practice

Section 1 of the Defective Premises Act 1972 imposes a duty on any person taking on work for or in connection with the provision of a dwelling — including building, conversion or enlargement — 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. The duty runs to the person ordering the work and to every person who acquires an interest in the dwelling.

The breadth of “taking on work” is what makes the Act dangerous. It covers builders, but it also covers architects, structural engineers, mechanical and electrical engineers, building surveyors, fire engineers, principal designers, principal contractors, approved inspectors and, in many circumstances, sub-contractors and specialist consultants. Anyone whose professional input contributes to the design or construction of a dwelling can be a defendant. The duty is non-delegable and arises in statute, so contractual limitation provisions in the underlying appointment may not bite in the same way as on a contract claim.

The Supreme Court’s decision in URS Corporation Ltd v BDW Trading Ltd [2025] UKSC confirmed that a developer who has voluntarily remediated a building it no longer owns can still recover from a structural engineer under the Defective Premises Act 1972 — meaning the claimant pool now extends well beyond the original purchaser. That decision broadened the practical scope of the Act materially.

For a PI buyer, the practical exposures are: any historic dwelling work the firm has touched, any current dwelling work it is on, and the contractual chain by which other parties might pass claims through to it. A 1998 cladding specification by a building surveyor, a 2008 structural design by an engineer, a 2014 EWS1 form, a 2021 fire compartmentation design by an architect — each is a potential Defective Premises Act 1972 claim running until 2028, 2038, 2044 and 2051 respectively.

How the cover usually responds

A claim under the Defective Premises Act 1972 is a civil claim for damages arising from the breach of a statutory duty applied to the firm’s professional services. Standard PI policy insuring clauses respond to civil liability for breach of professional duty, with the statutory duty under section 1 falling squarely within that scope, subject to:

• Fire safety and combustible materials exclusions. Where the Defective Premises Act 1972 claim is grounded in fire-related defects, the wording’s fire safety exclusion may engage. The breadth of the exclusion is the determining factor — narrow exclusions targeting external wall systems will not bite on compartmentation or means of escape; broad exclusions targeting “any breach of fire safety regulations” may.
• Aggregation. A single defective design affecting multiple flats in one building is the textbook aggregation case. Under AIG Europe Ltd v Woodman [2017] UKSC 18, the question is whether the multiple claims arise from one act, omission, event or related matters or transactions. A single cladding specification used on 60 flats will normally aggregate to one claim — favourable to the insured on per-claim erosion of the limit, but it consumes the full each-and-every limit once.
• Defence costs. Defective Premises Act 1972 disputes are technically complex and expensive to defend. Inside-the-limit defence costs erode capacity rapidly. Outside-the-limit defence costs is the gold standard.
• Continuity and retroactive date. A claim arising from 2007 work but first notified in 2027 attaches to the 2027 policy, provided the insured held continuous cover with a matching retroactive date. Continuity gaps are the single biggest cause of declinature on long-tail Defective Premises Act 1972 claims.

The Insurance Act 2015 governs disclosure and remedies. Section 3 requires fair presentation of every material circumstance known to senior management. Section 11 limits the insurer’s ability to rely on warranties or conditions unrelated to the actual loss. Section 14 preserves the duty of good faith. Where insurers seek to decline on disclosure or condition arguments, section 11 should be raised actively by the broker.

Common mistakes

1. Assuming the Defective Premises Act 1972 is a builder’s statute; it applies in the same terms to professional consultants undertaking design or inspection work on dwellings.
2. Letting a continuity gap arise — a single month uninsured between policies on a dwelling-active book can lock out a thirty-year liability from any policy.
3. Treating a fire safety exclusion as boilerplate; the definition determines whether the exclusion bites on a Defective Premises Act 1972 claim and the definitions vary widely.
4. Assuming aggregation is automatically favourable; on an aggregated limit it consumes capacity in one go and leaves the insured exposed for the rest of the year.
5. Forgetting that the Building Safety Act 2022, section 135 extension applies regardless of whether the building is a Higher-Risk Building. The Act applies to every dwelling, not only to mid-rise residential.

Worked example

A structural engineering firm — four directors, mixed residential and commercial — designed a balcony system used on a 90-unit residential development that completed in 2010. In 2027 the freeholder notifies a Defective Premises Act 1972 claim alleging the balconies are not fit for habitation due to inadequate fire resistance of the supporting steelwork specification. The pleaded loss across all units is £6.2m.

The firm carries £10m aggregate PI with defence costs in addition. Continuous cover since 1999, retroactive date 1999. The fire safety exclusion is drafted narrowly — limited to external wall systems and combustible cladding — so the structural fire resistance claim falls outside its scope. Aggregation: the broker confirms with the insurer in writing that the 90 units arise from a single design and aggregate to one claim eroding the limit once. Defence costs reach £1.1m across two years; settlement at £4.6m, all within the each-and-every limit. The firm absorbs the £150,000 self-insured retention and retains capacity for unrelated claims.

What to do at renewal

The Defective Premises Act 1972 changes the conversation at renewal in three ways. First, the historic exposure becomes the dominant disclosure question. Underwriters expect a clear statement of dwelling work by decade — rough fee count, project type, regional split. Second, fire safety wording becomes a negotiation point on every renewal, not only after a notification. Third, the retroactive date and continuity audit become an annual discipline, not a one-time set-up.

Specific actions:

• Build and maintain a dwelling exposure register, updated annually, covering work going back to 1992 to the extent records permit.
• Reconcile circumstance notifications to the register; any pending remediation conversation should be notified.
• Push the broker to test the fire safety exclusion wording across at least three markets and bring written comparisons to the partner who signs the order.
• Confirm retroactive date in writing on the schedule on every renewal, not just at inception.
• Price run-off cover annually as a market signal, even if the firm is not winding down. The price tells you how the market sees the tail on your historic book.

Apex’s view

Apex’s view: The Defective Premises Act 1972 is doing more work than any other piece of construction liability law in the country and the insurance market is still maturing in how it responds. We see well-run construction PI placements where the partner signing the order does not know whether the policy responds to a structural compartmentation claim or to an EWS1 dispute. That is fixable with a written wording briefing and an annual retroactive date confirmation — neither of which is expensive. We continue to advise that any practice with material historic dwelling exposure budgets for the tail at thirty years, treats the run-off question as a strategic one, and runs aggregation arguments actively rather than as default. The Act is not narrowing. The discipline has to.

See also

• The Building Safety Act 2022 and PI Insurance
• Building Safety Act 2022: PI Insurance Implications
• Building Surveyors and the Building Safety Act
• Defective Premises Act
• Engineers PI

Sources

1. Defective Premises Act 1972, section 1
2. Building Safety Act 2022, sections 130 and 135
3. Limitation Act 1980, sections 1, 14A and 14B
4. Insurance Act 2015, sections 3, 11 and 14
5. RICS Professional Indemnity Insurance Minimum Approved Wording
6. AIG Europe Ltd v Woodman [2017] UKSC 18
7. URS Corporation Ltd v BDW Trading Ltd [2025] UKSC