Western Australia Home Indemnity Insurance: $20,000 Threshold, $40,000 Deposit and $200,000 Defects

Western Australia’s compulsory home indemnity insurance (HII) threshold is $20,000: the WA Government’s Commerce Minister media statement dated 8 April 2025 says projects valued at $20,000 or more are covered, while its Home indemnity insurance fact sheet dated 25 September 2025 describes residential building work valued over $20,000. Separately, the reforms approved in the 8 April 2025 statement would double maximum payouts to up to $40,000 for lost deposits and up to $200,000 for incomplete or defective works where an eligible homeowner’s builder dies, disappears or becomes insolvent. The statement said the changes would take effect “as soon as possible” but did not provide a fixed commencement date; figures checked 1 October 2026.

This is general information, not financial or legal advice. Check the current WA Government or Building and Energy information and the policy’s PDS for the rules and claim terms that apply to your project.

Is HII required at exactly $20,000?

The official pages place the compulsory threshold at $20,000 but use different boundary wording:

If the project value is exactly $20,000, ask Building and Energy to confirm the applicable requirement rather than relying on the different wording.

The compulsory-cover threshold and the reform payout amounts answer different questions:

• Is HII required? This depends on the project value and the applicable HII rules.
• How much might an eligible claim receive? The approved reforms refer to maximum amounts of up to $40,000 for a lost deposit and up to $200,000 for incomplete or defective works.
• When might cover respond? A relevant circumstance concerning the builder and the policy terms must apply.

The WA Government’s 20 May 2025 obligations guidance also says HII is not required for associated work performed alone under a separate contract, such as installing a swimming pool, carport or pergola, or landscaping. If a builder claims an exemption and is uncertain, check with Building and Energy.

What does HII protect against?

The WA Government guidance says HII protects owners against the risk of losing a deposit or suffering other financial loss when the builder cannot complete the work or meet a valid claim for faulty or unsatisfactory building work because a relevant circumstance exists.

A relevant circumstance can include:

• An individual builder dying, disappearing or becoming insolvent.
• A non-individual builder, such as a corporation, ceasing to exist or becoming insolvent.
• The State Administrative Tribunal cancelling the builder’s registration, or the Building Services Board not renewing it, because the builder failed to satisfy financial requirements prescribed under regulations made under the Building Services (Registration) Act 1991 (WA).

These circumstances are separate from ordinary construction problems. Whether a particular loss is covered depends on the relevant circumstance, eligibility and the policy terms.

When must the builder obtain and provide cover?

For residential building work to which the HII requirement applies, the builder’s obligations include:

• Before the contract is signed or a deposit is paid: provide the owner with the “Notice for the homeowner”, which is Schedule 1 of the Home Building Contracts Regulations 1992. It summarises the main requirements of the Home Building Contracts Act 1991 and the requirement for HII.
• Before accepting or claiming payment, or starting work: take out HII in the owner’s name and obtain an HII certificate for the proposed work.
• During the building approval process: provide a copy of the HII certificate to the owner and the permit authority.

A builder who fails to obtain required HII risks substantial penalties and disciplinary proceedings.

How can an owner check the certificate?

Under the WA Government’s 20 May 2025 guidance, the permit authority checks that:

• The builder submitted an HII certificate for the proposed work.
• The certificate is watermarked.
• The certificate was issued by QBE.
• Its details match QBE’s Builders Warranty Insurance Certificate Register.

An HII eligibility certificate or a construction/public liability insurance certificate cannot be substituted for the HII certificate. Owners can use the same register to compare the builder-provided certificate with QBE’s records.

Building and Energy can also advise which HII providers are approved.

What happens if the builder changes during construction?

If the builder changes before the permitted work is completed, the proposed new builder must obtain an HII certificate for the proposed building work or the required stage and provide a copy to the owner. The new builder should also provide a copy to the permit authority.

Owners should confirm that the new builder has HII for the relevant residential building work and that they have received the certificate.

When could the $40,000 and $200,000 reform amounts apply?

The approved reform announcement sets out these possible maximum amounts:

These are not automatic payouts. The announcement refers to homeowners who are eligible, and the amount available under an individual policy must be confirmed from its PDS.

The 8 April 2025 statement said the changes would take effect “as soon as possible” but supplied no fixed commencement date. Check the current regulator page before relying on the reform amounts for a particular policy.

The statement also says that, in most cases, the policy must cover the construction period and six years from the practical completion date. That is a separate question from the maximum amount payable.

Sources

• Commerce Minister media statement – Insurance reforms to better protect home owners
• Home indemnity insurance fact sheet
• Home indemnity insurance – a reminder about your obligations

FAQ

Is HII compulsory when the project is exactly $20,000?

The cited official pages use different wording: one says $20,000 or more, while the other says over $20,000. Ask Building and Energy to confirm the requirement for a project valued at exactly $20,000.

Are $40,000 and $200,000 guaranteed payouts?

No. They are maximum amounts that eligible homeowners may be entitled to under the approved reforms when the stated builder circumstances occur. The policy’s PDS and the confirmed commencement of the reforms must be checked.

Can the builder claim payment or start work before obtaining HII?

No. Where HII is required, the builder must take it out before accepting or claiming payment and obtain the certificate before commencing the work.

What should the owner receive before signing or paying?

Before the contract is signed or a deposit is paid, the builder must provide the “Notice for the homeowner”. Where HII is required, the certificate must also be obtained before payment is accepted or claimed and work starts.

Does public liability insurance or an HII eligibility certificate replace HII?

No. The WA Government guidance says the permit authority must receive the HII certificate, not an HII eligibility certificate or a construction/public liability insurance certificate instead.