Policy exclusions for flammable polyethylene cladding fail to consider varying risk profiles such as the height of a building, its use and the nature of occupants, an expert says.

Halliwell group market strategy director for Asia-Pacific Wayne Bretherton recommends policyholders have properties assessed if seeking broader terms.

“I’d be encouraging any building owner that has identified cladding material on it to have an assessment and use that as a way to talk to their insurer about their building’s actual holistic risk,” Brisbane-based Mr Bretherton told insuranceNEWS.com.au.

“We have enough knowledge now that we can actually look at this in a more sophisticated way that may actually assist and inform the insurance sector.”

Halliwell says that – unlike on tall buildings – some percentage of polyethylene material in cladding is permitted on single- or two-storey properties in some instances.

“It might be acceptable limits of risk ... The difference is what the building is used for, and the vulnerability of the occupants,” Mr Bretherton said.

Sleeping accommodation or hospitals represent the higher end in terms of vulnerable occupants; low-rise office space used only during the day is at the other end.

“It’s a totally different risk profile,” he said. “If you’re talking a single- or two-storey building, in some cases the use of that material is actually permitted versus a tall building.

“Placing holistic bans on materials can be fraught – each building would have to be treated on its merits.

“When someone says to me, ‘Do I have to take the cladding off the building?’ If it’s 100% PE, the answer is yes, mainly.

“But if it’s the [fire-retardant] product, the answer is: it depends. It needs an assessment for someone to actually determine if the building is safe or not.”

Mr Bretherton says recent court cases have shown individual contract terms are the decider on cladding liability, dictating whether the cost of rectifying combustible cladding lies with the architect/designer, builder, engineer or owner.

For insurers, professional indemnity cover is more likely to apply than physical building insurance.

“There’s plenty of those type of claims still running. It’s primarily to do with the removal and replacement and who pays,” Mr Bretherton said. “It depends on the contractual terms between the principal and the contractor, and how that interplays with the various design professions as well. There’s no single case study – they’re all very, very different.”