The WA Government media statement, published 8 April 2025, says eligible homeowners may be entitled under reforms approved by the McGowan Government 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. It says the scheme changes will take effect as soon as possible, but it does not state an exact commencement date. Figures checked 1 October 2026.
What do the approved maximum amounts cover?
The WA Government’s 8 April 2025 statement sets the following approved maximums:
| Loss category | Approved maximum | Stated eligibility trigger |
|---|---|---|
| Lost deposits | Up to $40,000 | The builder dies, disappears or becomes insolvent |
| Incomplete or defective works | Up to $200,000 | The builder dies, disappears or becomes insolvent |
The higher cap covers incomplete or defective works, rather than defects alone. The statement uses “may be entitled”, so these are maximum amounts rather than a promise that every eligible homeowner will receive the full amount.
When is home indemnity insurance compulsory?
The WA Government states that home indemnity insurance is compulsory for residential building projects valued at $20,000 or more.
Under the Home Building Contracts Act 1991, the builder must take out home indemnity insurance in the owner’s name before accepting payment or commencing work.
How long must the policy cover the project?
In most cases, the policy must cover the construction period and six years from the practical completion date. This is the coverage period described by the WA Government; the announcement does not provide a separate deadline for lodging a claim.
When will the reforms take effect?
The WA Government’s 8 April 2025 statement says the scheme changes will take effect “as soon as possible”. It does not provide an exact commencement date, so the approved caps should not be treated as confirmation that they already apply to every policy or project.
Check the WA Government source page for the current status before relying on the reforms for a particular residential building project.
What should homeowners check?
- Confirm the project value and whether the compulsory-insurance threshold applies.
- Ask the builder to confirm that the policy is in the homeowner’s name and was taken out before payment or work commenced.
- Read the policy’s Product Disclosure Statement for the applicable commencement date, eligibility requirements, definitions and claim process.
- Check the WA Government page for updates to the reform commencement.
This is general information, not financial or legal advice. Check the regulator page and your policy’s PDS before relying on a particular cap.
Sources
FAQ
How much were the WA reforms approved to cover?
In its 8 April 2025 statement, the WA Government approved maximums of up to $40,000 for lost deposits and up to $200,000 for incomplete or defective works for eligible homeowners.
Does a defect alone meet the eligibility trigger?
For the approved caps, the stated trigger is the builder’s death, disappearance or insolvency. Incomplete or defective works are the affected loss categories, not the trigger themselves.
When will the reforms take effect?
The WA Government says the changes will take effect as soon as possible. Its 8 April 2025 statement does not provide an exact commencement date.
Is home indemnity insurance compulsory for every home project?
No. The WA Government says it is compulsory for residential building projects valued at $20,000 or more. The builder must take out insurance in the owner’s name before accepting payment or commencing work.
How long does home indemnity insurance usually cover the project?
In most cases, the policy must cover the construction period and six years from the practical completion date.
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