Figures checked 1 October 2026.
In its media statement dated 8 April 2025, the WA Government said eligible homeowners may be entitled to up to $40,000 for lost deposits and up to $200,000 for incomplete or defective works if their builder dies, disappears or becomes insolvent. These are maximum amounts for eligible homeowners, not automatic payouts.
What do the $40,000 and $200,000 cover?
Under the reforms described in the WA Government’s announcement, both maximums depend on the builder dying, disappearing or becoming insolvent:
| Loss or work affected | Maximum stated in the announcement |
|---|---|
| Lost deposits | Up to $40,000 |
| Incomplete or defective works | Up to $200,000 |
Eligibility still matters. The maximum figures do not show whether a particular homeowner or claim qualifies, so the applicable scheme rules and policy PDS must be checked.
When must a builder take out home indemnity insurance?
The compulsory threshold and timing requirements are:
- Project: Home indemnity insurance is compulsory for a residential building project valued at $20,000 or more.
- Policyholder: Under the Home Building Contracts Act 1991, the builder must take out the insurance in the owner’s name.
- Timing: The insurance must be in place before the builder accepts payment or commences work.
The $20,000 project-value threshold determines when the requirement applies; it is separate from the loss maximums described in the reforms.
How long does home indemnity insurance usually cover?
In most cases, the policy must cover:
- The construction period; and
- Six years from the practical completion date.
The WA Government’s statement gives this as the general coverage requirement. The policy’s PDS should be checked for the precise cover period and any exceptions.
When did the WA Government say the reforms would take effect?
In its 8 April 2025 statement, the McGowan Government said it had approved reforms to double the maximum payouts under Western Australia’s home indemnity insurance scheme. It stated that the scheme changes would take effect “as soon as possible”, rather than providing a fixed calendar date in the announcement.
For a particular policy or claim, check the current WA Government information to confirm how the reforms apply. The announcement date should not be treated as proof that a policy became subject to the new maximums on that date.
What should homeowners check before relying on these amounts?
- Confirm that the project is a residential building project valued at $20,000 or more.
- Ask the builder to confirm that home indemnity insurance has been taken out in the owner’s name before payment is accepted or work commences.
- Read the policy PDS for the construction and post-practical-completion cover periods, eligibility requirements and policy terms.
- Check the WA Government page for the current application and commencement of the reforms.
This is general information, not financial or legal advice. Check the regulator page and the policy’s PDS before relying on a maximum amount or making a claim.
Sources
FAQ
Are the $40,000 and $200,000 automatic payouts?
No. The WA Government said eligible homeowners may be entitled to those maximums if their builder dies, disappears or becomes insolvent.
When is home indemnity insurance compulsory in Western Australia?
It is compulsory for residential building projects valued at $20,000 or more.
Who must arrange home indemnity insurance, and when?
Under the Home Building Contracts Act 1991, the builder must take out the insurance in the owner’s name before accepting payment or commencing work.
How long does the policy usually cover?
In most cases, it must cover the construction period and six years from the practical completion date.
When will the reforms take effect?
The WA Government’s 8 April 2025 statement said the changes would take effect “as soon as possible”. Check the current WA Government information to confirm their application.