{{ propApi.closeIcon }}
Our industry
Our industry $vuetify.icons.faArrowRight
Economic research and forecasting Economics Housing outlook Tailored market research Economic reports and data Inspiring Australia's building professionals HOUSING The only place to get your industry news Media releases Member alerts Submissions See all
Business support
Business support $vuetify.icons.faArrowRight
Become an apprentice host Hire an apprentice Why host a HIA apprentice? Apprentice partner program Builder and manufacturer program Industry insurance Construction legal expenses insurance Construction works insurance Home warranty insurance Tradies and tool insurance Planning and safety services Building and planning services How can HIA Safety help you? Independent site inspections Solutions for your business Contracts Online HIA Tradepass HIA SafeScan HR Docs Trusted legal support Legal advice and guidance Professional services Industrial relations
Resources & advice
Resources & advice $vuetify.icons.faArrowRight
Building it right Building codes Australian standards Getting it right on site See all Building materials and products Concrete, bricks and walls Getting products approved Use the right products for the job See all Managing your business Dealing with contracts Handling disputes Managing your employees See all Managing your safety Falls from heights Safety rules Working with silica See all Building your business Growing your business Maintaining your business See all Other subjects COVID-19 Getting approval to build Sustainable homes
Careers & learning
Careers & learning $vuetify.icons.faArrowRight
A rewarding career Become an apprentice Apprenticeships on offer Hear what our apprentices say Advice for parents and guardians Study with us Find a course Get your builder's licence Learn with HIA
HIA community
HIA community $vuetify.icons.faArrowRight
Join HIA Sign me up How do I become a member? What's in it for me? Get involved Become an award judge Join a committee Partner with us Get to know us Our members Our people Our partners Mates rates What we do Mental health program Charitable Foundation GreenSmart
Awards & events
Awards & events $vuetify.icons.faArrowRight
Awards Australian Housing Awards Awards program National Conference Industry networking Events
HIA products
HIA products $vuetify.icons.faArrowRight
Shop @ HIA Digital Australian Standards Contracts Online Shipping and delivery Purchasing terms & conditions Products Building codes and standards Hard copy contracts Guides and manuals Safety and signage See all
About Contact Newsroom
$vuetify.icons.faMapMarker Set my location Use the field below to update your location
Change location
{{propApi.text}} {{region}} Change location
{{propApi.successMessage}} {{region}} Change location

$vuetify.icons.faPhone1300 650 620

Home Indemnity Insurance in Western Australia

Residential builders in Western Australia are aware they need to hold ‘home indemnity insurance’ (HII) policies. But who and what does HII cover? Is it always required? Ensure you don’t over (or under) insure!

Home indemnity insurance is a compulsory policy of insurance that must be held by a builder when carrying out residential building work. In WA HII is a requirement under the Home Building Contracts Act 1991 (the HBCA).

What does HII cover?

The HII policy is taken out for the benefit of current and future homeowners. It covers the homeowner for:

  • loss of deposit
  • non-completion of building work; and
  • defective workmanship for a period of 6 years after practical completion.

An owner can make a claim under the HII policy if the builder: 

  • is deceased
  • is missing
  • is insolvent
  • was a company and no longer exists or
  • has had its registration cancelled or declined for renewal due to failure to satisfy the financial requirements.

When does a HII certificate need to be provided?

The builder must ensure they provide the homeowner with the HII certificate prior to:

  • commencing any residential building work; or
  • requesting any money under the contract, including the deposit.

A copy of the HII certificate will also be required as a part of the building permit application.

If a builder does not provide the owner with the HII certificate in accordance with the requirements of the HBCA, they may be subject to a substantial fine. It may also impact the builder’s registration.

What type of work requires HII?

There are three steps in deciding whether you need to take out HII:

  1. Are you carrying out “residential building work”?
  2. Does the work require a building permit?
  3. Are there any applicable exemptions?

The flow chart included at Annexure A provides some further detail and may assist members in determining HII requirements.

Some example scenarios have also been provided under Annexure B.

What type of work does not require HII?

Some examples of building work that does not require HII include:

  • work worth less than $20,000;
  • work that is not required to be carried out by a registered builder;
  • work under contracts for ‘associated work’ alone, e.g. swimming pools, retaining walls, garages, pergolas; and
  • non-residential (commercial) building work.

What exemptions are available?

Exemptions are available for:

  • A registered building contractor (individual) who is building their own home. The builder must seek an exemption by making a declaration that they have not obtained an exemption within previous last 6 years. HII must be obtained within 7 years of the date of the building permit if the home is sold.
  • Owner-builders. However, if the owner-builder sells the home within 7 years of the date of the building permit, they will be required to obtain HII for the benefit of the new owner.
  • Multi-storey, multi-unit developments, which have either:
    • 4 storeys or more; or
    • have more than one basement level.
  • Work on retirement villages in which all the dwellings are or are intended to be occupied under a residential tenancy agreement or other lease arrangement.

A partial exemption is also available for ‘developers’. Developers are property owners who carry on a business selling or leasing developments of four or more dwellings.

Builders must take out HII when contracting with a developer and must provide the developer with the HII certificate prior to commencing work or taking any payment. However, the HII coverage applies to defective workmanship for a period of 6 years from practical completion only. Builders do not need to provide developers with HII coverage for loss of deposit or non-completion of the works.

This same partial exemption also applies to builders carrying out work under a cost-plus contract.

What if it is unclear whether HII is required?

Sometimes it is not immediately clear whether HII is required. If the legislation does not specifically address the type of project you are working on, you should make enquiries with your insurer or HIA’s Workplace Services team.

If a dispute arises and it is unclear whether HII is required, the ambiguity will likely be resolved in favour of the consumer. For example, in a recent court case it was determined that short-term residential accommodation may require HII in some circumstances.

Who pays for HII?

The builder is required to pay for HII when taking out the cover.

This cost can then be passed on to the homeowner as a part of the contract price. The builder must ensure they make an allowance for the cost of HII in the price to ensure they can claim for it.

If you require HII for your upcoming projects, contact HIA Insurance Services to discuss the options available for your business.

If you require advice on building permit requirements, the HIA Technical Services team can assist.

Annexure A - Do you require HII?

Do you require HII?
{{ propApi.expandedIcon }} {{ propApi.collapsedIcon }}
Annexure A

Annexure B – Example Scenarios

Example B - The new home
{{ propApi.expandedIcon }} {{ propApi.collapsedIcon }}

Luxury Estate Builders is a registered building company who are intending to enter into a building contract with the Don and Jill Amara. They are building a new home with landscaping and a swimming pool, worth $1.2 million in total.

Step Outcome
1. Is the work Residential Building Work? Yes. The work includes building a dwelling and associated work and is valued over $20,000.
2. Does the work require a building permit? Yes. The work is structural and the builder has checked this with HIA Technical Services.
3. Is there an applicable exemption? No.
Is HII required? Yes, for the full value of the works.
Example B - The kitchen renovation
{{ propApi.expandedIcon }} {{ propApi.collapsedIcon }}

Max Smithson Designs (MSD) specialises in kitchen, bathroom and laundry works.  Darren appoints MSD to carry out the installation of new kitchen cabinets, benchtops, splashback and appliances in his home, worth $53,700 including GST.

Step Outcome
1. Is the work Residential Building Work? Yes. The work includes renovation work and is worth over $20,000.
2. Does the work require a building permit? No. Despite being valued over $20,000, the work is not structural. The builder has confirmed this with the local authority.
3. Is there an applicable exemption? No.
Is HII required? No.
Example C - The apartment block
{{ propApi.expandedIcon }} {{ propApi.collapsedIcon }}

Envelope Construction Pty Ltd has been engaged by Pristine Developments to build a five-storey apartment block, including two retail tenancies on the ground floor and 14 apartments above.  The value of the development is $12 million + GST.

Step Outcome
1. Is the work Residential Building Work? Yes. The work includes building dwellings and is worth over $20,000.
2. Does the work require a building permit? Yes. The work is structural and the builder has confirmed with HIA Technical Services.
3. Is there an applicable exemption? Yes. The multi-storey multi-unit exemption applies.
Is HII required? No, however the exemption process must be followed.

To find out more, contact HIA's Workplace Services team

Email us

Share with your network:

More articles on:

{{ tag.label }} {{ tag.label }} $vuetify.icons.faTimes
Find guides, how-tos, resources and more

Managing your business


Can’t find what you need, check out other resources that might be closer to the mark.

Explore resources