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November , 27

In 2014, the Lacrosse building fire in Victoria sparked serious concerns for the safety of buildings across the state. The true extent of this crisis has since come to light, with the consequences of costly, dangerous defects being endured by property owners throughout Australia.

The Impact on Property Owners

At least 3400 residential unit blocks, which comprise of about 170,000 apartments, are at risk of having been constructed using flammable cladding. As the number of impacted property owners across Australia continues to rise, the immanent need for a systematic, enforceable solution is becoming increasingly difficult to ignore.

In a bid to protect affected buildings from arson, the Victorian Government are keeping the growing list of about 1100 properties containing flammable cladding private. In many cases, buildings that were initially deemed compliant when reviewed against Australian standards have, upon appraisal, now been found to contain combustible cladding.

Often, homeowners receive little information regarding their property’s new ruling and, with an unclear course of action for the issue’s resolution, they experience immense emotional and financial strain. However, if impacted landholders decide to put their property on the market, such defects must be disclosed and, as such, it will likely be sold at a loss.

What’s Being Done to Rectify the Issue?

During August, a bill aimed at banning the importation of flammable cladding was reintroduced into the Australian parliament. However, such suggestion has received mixed responses, and while some individuals believe that allowing combustible cladding into the country is paramount, others reject the ban. This is because, when used in the appropriate circumstances, aluminium composite panel can be a safe and legitimate building material. For this reason, an import ban could negatively impact those using this resource for signage, wrapping ATMs and road barriers.

The Victorian Government have committed to paying $600 million toward the rectification of major defects, dedicating resources to the restoration of more than 500 buildings that have been classified as high-risk. However, such funding packages aren’t unanimous across the country. The New South Wales and Queensland Governments have expressed that they won’t be following in Victoria’s footsteps. They have concluded that the builders and insurers of impacted properties ought to be held financially accountable, rather than taxpayers.

In July, insurers ceased to offer exemption-free cover, worsening the professional indemnity crisis that materialised after the widespread discovery of combustible cladding in buildings. Until Governments across Australia reach a mutual agreement and enforce viable solutions aimed at rectifying impacted buildings, it’s unlikely that insurance providers will reinstate exemption-free cover. Thus, for the foreseeable future, the circumstances surrounding professional indemnity insurance are expected to remain relatively stagnate.

If you have any queries relating to your building’s cladding or your other insurances, please get in touch with your insurance broker.


Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

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