The WA Government will double the maximum payouts under its home indemnity insurance program in a reflection of rising values and the need to enhance consumer protections.

Commerce Minister Roger Cook said last week that the Government had approved changes that mean eligible homeowners may be entitled to up to $40,000 for lost deposits, and up to $200,000 for incomplete or defective works in the event their builder dies, disappears, or becomes insolvent.

“The changes to home indemnity insurance reflect current market values and challenges. We want to ensure that if a builder becomes insolvent, families are better protected and can finish their dream home,” Mr Cook said.

“Improved home indemnity insurance coverage will give prospective home buyers the peace of mind and the confidence to build, knowing that if things do go wrong there will be a much better safety net.”

Under the WA Home Building Contracts Act 1991, a builder must take out the insurance in the owner's name before accepting payment or commencing work for residential building projects valued at $20,000 or more.

In most cases, the policy must cover the construction period and six years from the practical completion date.