NSW has taken an important step towards introducing 10-year defect insurance for apartment buildings.
On 6 August 2026, the NSW Government passed legislation supporting the introduction of Decennial Liability Insurance, commonly known as DLI.
For apartment buyers and investors, it sounds like a major new layer of protection.
But there is one important point:
Not every NSW apartment is automatically covered.
What is 10-year defect insurance?
Decennial Liability Insurance is designed to provide up to 10 years of protection against certain serious building defects.
The proposed cover focuses on critical building elements such as:
Structural components
Waterproofing
Fire safety systems
The insurance is also designed to remain with the building, rather than the individual owner.
This means that if a covered apartment is sold during the insurance period, the remaining protection can continue for the next owner.
Does every NSW apartment now have this cover?
No.
The legislation creates the framework needed for the insurance to be introduced, but it does not automatically insure every apartment building in NSW.
As of August 2026, Building Commission NSW is still working with prospective insurers and assessing policies before they can be rolled out.
This means buyers should not assume that a new apartment automatically comes with 10 years of defect protection.
The important question is:
Does this specific building actually have an approved policy?
What about existing apartments?
Existing apartment buildings should not be assumed to have received new 10-year insurance protection because of the recent announcement.
If you are considering an established apartment in Sydney, check what protections already apply to that particular building.
The age of the development, its building history and its existing insurance arrangements still matter.
What should buyers check?
If defect insurance is mentioned when you are considering a property, ask for clear confirmation.
Check:
Whether the building actually has DLI
When the insurance period started
What types of defects are covered
Whether previous defect claims have been made
Whether strata records identify building problems or planned repairs
It is also worth having your conveyancer or solicitor review the relevant documents before relying on any insurance claims made during the sale process.
Does this replace normal due diligence?
No.
Even where 10-year defect insurance applies, buyers should still investigate the condition and history of the building.
A strata report may reveal issues such as:
Previous building defects
Planned rectification works
Special levies
Insurance claims
Disputes involving the owners corporation
For investors, these issues can affect ongoing costs, future resale and the overall performance of the property.
The Bottom Line
NSW’s move towards 10-year apartment defect insurance is a positive development for buyers and owners.
But it is important not to misunderstand what has changed.
The new legislation does not mean every NSW apartment now has 10 years of defect cover.
Before purchasing an apartment, confirm whether the individual building is actually insured, what the policy covers and how much of the insurance period remains.
Good insurance protection can reduce risk.
It should still sit alongside proper property and strata due diligence.
Considering an apartment in Greater Sydney?
Whether you are buying your first home or adding to your property portfolio, understanding the building behind the apartment is an important part of making an informed decision.
Speak with RnJ Realty for experienced Greater Sydney property guidance and property management insight.
