The $6.9 million professional indemnity (PI) insurance coverage secured by the Victorian Government is a “market first” for the construction sector, according to Lockton Companies Australia, the broker that arranged the exclusion-free program.

Lockton says the PI program is underwritten by a group of insurers and reinsurers who prefer not to be identified.

Cladding Safety Victoria, the agency overseeing the repairs, said last week having the PI cover means the state can progress with its repair program as planned.

“The Lockton Construction team in Australia worked closely with [Cladding Safety Victoria] to build a compelling story for insurers, securing a comprehensive insurance solution for Victoria’s world first $600 million Cladding Rectification Program,” National Manager Construction and State Manager Queensland Peter Jeeves told insuranceNEWS.com.au today.

“Lockton was able to secure an insurance program for the CRP that fully addressed the insurable risks of all stakeholders involved in the program.

“It enabled building practitioners unable to secure exclusion-free cladding PI cover to participate in the program as well as comfort to owner corporations, building owners and tenants that broad insurance cover was protecting the liabilities and physical risks associated with these works.”

Securing the indemnity cover had been crucial to the state’s $600 million remediation scheme to remove dangerous cladding from affected high-rise buildings. PI insurance providers globally have stopped issuing exclusion-free cover, including for defective cladding materials, in response to potentially costly claims.

“The Victorian Government will pay the policy premiums to make sure appropriate insurance coverage is available to all practitioners,” Cladding Safety Victoria said in a statement to insuranceNEWS.com.au.

“This means that project managers, fire safety engineers, architects, building surveyors, contractors and subcontractors will all have protection under the program-wide policy.

“Critically, owners will have recourse to insurance if a claim is necessary down the track.”