Home Indemnity Insurance Claim Process in Western Australia

What it is

Home Indemnity Insurance (HII) is the statutory home warranty product required in Western Australia. The Home Building Contracts Act 1991 (WA) requires a builder to take out an HII policy before accepting payment or starting residential building work valued at more than $20,000. The cover protects the homeowner and any subsequent owner during the warranty period. The Department of Energy, Mines, Industry Regulation and Safety (DMIRS) Building and Energy division regulates the scheme and publishes the official homeowner guidance at wa.gov.au/organisation/building-and-energy.

Unlike NSW HBCF or Victorian DBI, HII in WA is offered by private insurers (currently Coverforce QBE and Resilium under the QBE underwriting arrangement) rather than a single government insurer. Each insurer issues its own Certificate of Insurance. The minimum policy terms are prescribed by the Home Building Contracts (Home Indemnity Insurance Exemptions) Regulations 2002 (WA) and the Home Building Contracts Regulations 1992 (WA).

When you can claim

HII is a strict last resort policy. The cover responds only if the builder cannot perform because of:

• death;
• disappearance (after due search and inquiry); or
• insolvency, including liquidation, voluntary administration or bankruptcy.

WA does not include the licence suspension trigger that applies in NSW or the tribunal non-compliance trigger that applies to post-1 July 2015 Victorian DBI certificates. A homeowner whose builder is alive, contactable and solvent cannot lodge an HII claim, no matter how badly the work has been performed. The homeowner's remedy in that case is the State Administrative Tribunal under the Building Services (Complaint Resolution and Administration) Act 2011 (WA).

What is covered

HII covers two main heads of claim:

• Loss of deposit and prepayments where the work cannot start, capped at $40,000 regardless of contract value.
• Cost of completing incomplete work and rectifying defective work, capped at $200,000.

The defect cover applies during the construction period and for six years after practical completion. The cover passes to subsequent owners during that warranty period.

The single most common claim in WA is for loss of deposit. The deposit cap of $40,000 applies even on contracts well above that figure. On a $1 million build with a $50,000 deposit, the homeowner who loses the full deposit recovers $40,000 only.

Time limits

HII policies require lodgement within a specific window after the homeowner becomes aware of the trigger event. The standard window is six months from the date the homeowner knew or ought to have known the builder had died, disappeared or become insolvent. Check the specific Certificate of Insurance because the wording varies between insurers. Defect claims must be lodged within the six-year warranty period.

Step by step process

Step 1: confirm the trigger

For a company, search the ASIC Insolvency Notices service for the builder's name and ACN. For a sole-trader builder, check the National Personal Insolvency Index. For disappearance, document the search and inquiry steps including return of mail, telephone records and visits to the registered address.

Step 2: identify the insurer and pull the certificate

The Certificate of Insurance issued when the deposit was paid identifies the insurer. If it is missing, ask the builder, the broker who arranged the policy or DMIRS Building and Energy. Building and Energy holds records of policies issued.

Step 3: lodge the claim with the private insurer

Lodge directly with the insurer named on the Certificate. Each insurer has its own claims form, but the documentary requirements are standard: contract, variations, schedule of payments, Certificate of Insurance, dated photos of the site and evidence of the trigger event.

Step 4: independent assessment

The insurer appoints an independent building consultant to scope the work outstanding and any defective work, and to value the cost of completion or rectification. The homeowner should attend the inspection and provide the contract documents.

Step 5: determination and settlement

The insurer issues a written determination accepting or declining each item. Settlement is usually by cash payment based on the cost to complete. Engaging a replacement builder is the homeowner's responsibility under WA practice. This contrasts with the QBCC approach where the insurer arranges the replacement builder.

Step 6: review and complaints

If the homeowner disputes the determination, the first step is the insurer's internal complaints process. After internal review, the homeowner can lodge a complaint with the Australian Financial Complaints Authority. AFCA has binding jurisdiction over private insurance disputes including HII up to the AFCA monetary limit. DMIRS Building and Energy can also assist with regulatory aspects but does not have direct power to override the insurer's decision.

State Administrative Tribunal proceedings

The State Administrative Tribunal (SAT) handles building disputes in WA. Once the builder is in administration, section 440D of the Corporations Act 2001 (Cth) stays the SAT proceedings. The HII claim against the insurer is separate from any SAT proceedings against the builder so the homeowner can run the HII claim while the SAT matter is paused.

The Building Services (Complaint Resolution and Administration) Act 2011 (WA) gives the Building Commissioner power to issue rectification orders against a registered builder. These orders do not assist where the builder is insolvent because the entity ordered to rectify no longer functions.

When the cap runs out

If the cost of completing incomplete work plus rectifying defects exceeds $200,000, the homeowner is exposed for the balance. The $40,000 deposit cap is particularly tight on premium builds. Remaining options after the cap is reached are a proof of debt with the liquidator, claims against directors personally where insolvent trading is involved and claims against subcontractors where they have breached their separate professional obligations. The WA Parliament has held inquiries into expanding HII cover but the caps and triggers have not changed at the date of writing.