The WA Government media statement dated 8 April 2025 says eligible WA homeowners may be entitled to up to $40,000 for a lost deposit and up to $200,000 for incomplete or defective works if their builder dies, disappears or becomes insolvent. Figures checked 1 October 2026: the McGowan Government approved reforms to double maximum payouts, so these figures are approved caps rather than automatic payouts.
What do the approved caps cover?
For an eligible homeowner, the reform statement identifies these maximum amounts:
| Builder circumstance | Type of loss | Approved maximum |
|---|---|---|
| Builder dies, disappears or becomes insolvent | Lost deposit | Up to $40,000 |
| Builder dies, disappears or becomes insolvent | Incomplete or defective works | Up to $200,000 |
The $200,000 figure is specifically for “incomplete or defective works” in those circumstances. It is not described as a general payment for every defect.
Are these automatic payouts?
No. The WA Government uses the terms “may be entitled” and “up to”, so the figures are maximum amounts rather than guaranteed payments. The statement does not explain how an individual claim below either cap would be assessed.
The $20,000 threshold for compulsory home indemnity insurance is a separate requirement. It determines when a builder must take out insurance; it does not by itself establish that a homeowner will receive either reform cap.
When will the reforms take effect?
The WA Government said the scheme changes would take effect “as soon as possible”. The statement does not provide a fixed commencement date, so check the regulator page for the current status before applying the caps to a particular project or policy.
When is home indemnity insurance compulsory?
The WA Government says home indemnity insurance is compulsory for residential building projects valued at $20,000 or more. Under the Home Building Contracts Act 1991, the stated requirements are:
| Requirement | What the WA Government statement says |
|---|---|
| Project | Residential building project valued at $20,000 or more |
| Insurance | The builder must take out home indemnity insurance in the owner’s name |
| Timing | Before accepting payment or commencing work |
How long does the policy usually cover?
In most cases, home indemnity insurance must cover the construction period and six years from the practical completion date. This is a general policy requirement, not a promise that every claim remains open for the whole period.
What should homeowners check before relying on the caps?
Check the WA Government page for updates to the reform commencement and current scheme information. Also check the policy’s PDS for its coverage, conditions and duration.
This article provides general information, not financial or legal advice.
Sources
- Commerce Minister media statement – Insurance reforms to better protect home owners — WA Government, 8 April 2025; figures checked 1 October 2026.
FAQ
Are the $40,000 and $200,000 amounts guaranteed?
No. They are the maximum amounts for eligible homeowners in the specified builder circumstances. Check the current regulator information and the policy’s PDS for a particular claim.
Which builder circumstances are identified in the reforms?
The WA Government statement identifies a builder dying, disappearing or becoming insolvent.
Is there a fixed commencement date for the reforms?
No fixed date is given in the statement. The WA Government said the changes would take effect as soon as possible.
Does home indemnity insurance always last six years after practical completion?
No. In most cases, the policy must cover the construction period and six years from the practical completion date. Check the policy’s PDS for its specific terms.
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