NSW cladding update: insurance
Shortly after the Grenfell Tower fire tragedy in 2017, the NSW Government announced a response to the risks posed by external wall cladding.
The response consists of two components:
- a draft regulation with obligations for owners of buildings with combustible cladding
- an Explanation of Intended Effect (EIE) covering the proposed use of cladding for minor renovations or works that don’t need any building approval.
The proposed regulation suggests making building checks for combustible cladding compulsory, and will require building owners to register with the NSW Government if their building has combustible external wall cladding. After an assessment has been completed, building owners will then be required to undertake a fire safety assessment within set timeframe.
In the meantime, NSW Fair Trading recommends strata committees take the following actions:
- Find out if your building has aluminium cladding. If it does, you need to inform your insurer
- Check that the annual fire safety statement for your building is up-to-date
- Engage a fire safety professional to review to inspect the existing cladding, and overall fire safety for your building
- Take immediate action to any recommend changes.
What does this mean for your insurance?
From an insurance perspective, at this stage, the presence of cladding is only a problem if your strata manager or your owners corporation is aware that the cladding does not meet the minimum standards of the Building Codes of Australia (BCA).
What action does the committee need to take?
Just having cladding on your building is currently not a matter of disclosure. For now it is only a matter of disclosing if your strata manager or owners corporation are aware of non-compliant cladding on your building. Most owners corporations have not investigated if their cladding is up to code and are unaware of its compliance with BCA.
For more information on how Body Corporate Brokers is managing this issue download their Cladding Outlook HERE.