In Western Australia, a builder doing residential building work valued over $20,000 must take out home indemnity insurance in the owner’s name before accepting any payment or starting work. It protects against financial loss when the builder cannot finish the work or meet a valid claim for faulty work because the builder has died, disappeared or become insolvent, or has lost registration for failing the financial requirements.
General information, not insurance or legal advice. Building and Energy publishes the rules on home indemnity insurance and can be reached on 1300 489 099. Your certificate names the insurer that issued it.
When the policy pays
The policy responds only to what the law calls a “relevant circumstance” in relation to the builder. There are three ways one can arise:
- a builder who is an individual dies, disappears or becomes insolvent;
- a builder that is a company or other body ceases to exist or becomes insolvent;
- the builder loses registration on financial grounds: the State Administrative Tribunal cancels it, or the Building Services Board will not renew it, because the builder did not meet the financial requirements under the Building Services (Registration) Act.
In every other case the builder stays responsible for claims by the owner, and by later owners, through the six years after practical completion: the cover does not reduce the builder’s own liability.
The limits, as at October 2026
- Up to $200,000
- To complete the work, or the contract value if that is lower; claims for defective work within six years of practical completion come out of the same limit.
- Up to $40,000
- For a lost deposit.
- $500 excess
- The insurer may charge it, so the owner, or whoever owns the home later, may pay the first $500 of a claim.
- 6 years
- The cover generally runs through construction and for six years from practical completion, the day the work is finished and ready to be lived in.
The policy is in the owner’s name, and if the home is sold within the six years its benefit passes to the next owner. The builder pays the premium once, as part of the contract price. The insurers are private companies approved by the Minister for Commerce; the builder chooses one, provided it agrees to give the cover, and a builder who meets an insurer’s criteria will be able to get it. Building and Energy can say which insurers provide it.
Which work needs it
| The work | Cover needed? |
|---|---|
| A new home, an extension or a renovation, valued over $20,000 | Yes, before work starts or any payment is asked for. |
| Placing a home on land for the first time, such as a transportable | Yes, covering the home, putting it in place and later work on it. |
| A spec home, built by a registered builder for itself and sold finished | Yes: the builder takes it out before the building permit is granted, to protect buyers for six years after practical completion. |
| A pool, carport, pergola, fence or landscaping under its own separate contract | No, even when it is over $20,000. |
| Work under $20,000, or work that needs no building permit | No. |
| Cabinet making, tiling or painting that needs no permit or registered builder | No. |
Associated work done as part of a contract that also builds or renovates the home is covered when the total of all the work is more than $20,000.
What it does not cover
Money paid ahead of the work, other than the deposit, is generally outside the cover, and asking for it is itself a breach of the Act. Building and Energy also points out that a preparation of plans agreement is not part of the building contract, so the policy does not cover it. And because the deposit cover is capped at $40,000, a larger deposit is only partly protected.
Checking the certificate
Ask for your copy
The builder must give the owner a copy of the certificate of insurance before starting work or asking for a deposit or any other payment. Building and Energy’s advice is to make no payment until the insurance is in place.
Look at what you were given
Approved insurers began watermarking their certificates in 2016. Permit authorities are told to make sure the builder has not handed in something else instead, such as a certificate of eligibility or a public liability certificate.
Match it to the register
Building and Energy links to an insurer’s online certificate register, where the details on a certificate that insurer issued can be matched against its records.
Know it went with the permit
The builder lodges a copy of the certificate with the application for a building permit, and the permit authority can refuse the application without it.
If the builder changes partway through the build, the new builder must get its own certificate for the work and give the owner a copy. A builder who fails to take out the insurance can be prosecuted and fined up to $50,000, and risks losing registration. If you find the insurance is not in place when you need to claim, Building and Energy asks to be told, on 1300 489 099.
Buying a home an owner built
Owner-builders do not need the insurance while they build, but must have it if they sell within seven years of the building permit, covering the buyer for the rest of that period; the buyer should be given a valid certificate before the sale contract is finalised. A registered builder building its own home can be exempt once every six years, on the same seven-year condition if it sells. The grant rules for a new home are on the first home owner grant in WA.