Western Australia Contractor Insurance Requirements Explained

Short answer: Western Australia contractor insurance requirements are unusual: the state makes two insurances compulsory and shuts you out of one of them. Home indemnity insurance is required on residential building work valued over $20,000 under the Home Building Contracts Act 1991 — taken out by the builder, in the owner’s name, before accepting any payment or starting work. Workers compensation is compulsory if you employ workers. But if you trade as a sole trader or partner in WA, you are not covered by workers compensation at all.

Most contractor insurance advice written for Australia is written for the east coast, and misleads in WA at almost every point. The national tax authority is the ATO, which runs GST and sets the registration turnover threshold — check the current one there rather than trusting a figure in an article; WA levies no state sales tax. Your state regulator is Building and Energy, supporting the Building Services Board, while WorkCover WA regulates workers compensation without selling it. Registration thresholds sit in Western Australia contractor license requirements; on late payment, how to get clients to pay.

Which insurance is compulsory in Western Australia?

Cover	Compulsory?	Trigger
Home indemnity insurance (HII)	Yes	Residential building work over $20,000
Workers compensation	Yes, if you employ workers	Engaging a “worker” under the WCIM Act 2023
Motor vehicle third party personal	Yes	Registering a vehicle
Public liability	No general state rule — but a licence condition for electrical contractors	Contracts, specific licences
Builder’s surety bond	Not prescribed for building contractor registration	—

Two of those are compulsory because a WA statute says so; the third rides on vehicle registration. Nothing in the Building Services (Registration) Regulations 2011 prescribes public liability cover or a bond for a building contractor, which is why the pressure to carry liability insurance in WA comes from head contractors and principals rather than from the Board.

What is home indemnity insurance and when does it bite?

HII is WA’s name for what other states call home warranty, made under the Home Building Contracts Act 1991, with the dollar figures set in the Home Building Contracts Regulations 1992. Every number below comes from that Act and those regulations, not from a broker’s summary — and one of them is routinely quoted wrongly.

The policy responds only where a “relevant circumstance” exists in relation to the builder. Section 25D(1A) defines it exhaustively: an individual builder who “has died” or who “after due search and enquiry, cannot be found in Australia”; a non-individual builder that “ceased to exist”; a builder who “is insolvent”; or a builder whose “registration as a building service contractor was cancelled or not renewed because the builder did not satisfy the financial requirements” prescribed under the Building Services (Registration) Act 2011.

Element	Rule	Source
Threshold	Residential building work costing more than $20,000	s. 25A with reg 7
Who takes it out	The builder, insuring the owner and the owner’s successors in title	s. 25D(1)(a)
When	Before any demand for payment, “including any deposit”	s. 25C(2)
Cover period	Claims may be made “at any time before the expiration of a period of 6 years from the day of practical completion”	s. 25D(1)(d)
Minimum cover	$200,000, or the cost of the building work, “whichever is the lesser”	s. 25D(1)(e) with reg 7B
Loss of deposit	Up to $40,000	s. 25D(1)(a)(i) with reg 7A
Excess	The policy may leave the insurer not liable for up to $500	reg 5
Penalty	A fine of $10,000 — for performing the work uninsured, and again for demanding payment without giving the certificate	s. 25C(1) and (2)

Correct the $50,000 figure if you have seen it: the statutory maximum under section 25C is $10,000 per offence, and regulation 8 lets Building and Energy issue an infringement notice instead, with a modified penalty of $2,000 for section 25C(1) and $500 for section 25C(2). The real exposure is not the fine. It is that the owner’s remedy against you survives regardless.

Note also that the $20,000 threshold and the $40,000 and $200,000 limits are prescribed amounts, inserted by SL 2022/172. The Act itself still reads $10,000, $20,000 and $100,000, so a quote from the bare statute will mislead you. Read the Act and the regulations together.

The premium is a one-off payment made by the builder, so it belongs in your contract price rather than your margin. Insurers must be authorised under the Commonwealth Insurance Act 1973 and approved in writing by the Minister — this is a private market, not a public scheme.

HII does not reduce your liability. It bites only if a relevant circumstance exists; otherwise you stay responsible for claims by the owner, or successive owners, across those six years.

When is HII not required in WA?

This is where solo operators most often find themselves. HII is not required where:

• the cost of the building work is $20,000 or less — section 25A excludes work costing “the minimum amount or less” from the definition of residential building work, and regulation 7 prescribes that minimum as $20,000;
• a building permit under the Building Act 2011 is not required for the work — section 25B(4A)(a);
• a permit is required but the work “is not, or is not part of, a prescribed building service” under section 3 of the Building Services (Registration) Act 2011 — section 25B(4A)(b);
• the work is associated work done on its own. Section 3 defines associated work to include “site works, swimming pools, spas, pergolas, carports, garages, sheds, fencing, retaining walls, paving, driveways, landscaping and other like works,” and section 25A pulls that work into the regime only when it is contracted alongside the dwelling work itself or is associated work of a prescribed kind. A standalone pool or fence contract sits outside, whatever it is worth.

And the one that settles it for most one-person trades. The subcontractor exclusion is not a concession granted in a fact sheet — it is written into the definitions. Both “building contract” and “residential building work contract” in section 25A expressly exclude “a contract for the performance by a builder of residential building work for another builder who is in turn obliged to perform the work under another contract.” Sub to a registered builder and there is no insurable contract in your hands at all. Contract directly with the homeowner for residential building work over $20,000 and there is.

Owner-builders are handled separately, and more harshly than most expect. Section 25F makes it an offence carrying a $10,000 fine for an owner-builder to enter a sale contract “within 7 years of the date of issue of the relevant building licence, or the date of grant of the relevant building permit” without a complying policy and a certificate given to the purchaser. Section 25FA stacks a second restriction on certain owner-builders: no selling or otherwise disposing of the land within 3 years unless the Minister consents, again at $10,000.

That combination catches registered builders who use the own-home carve-out. Section 25B(3) exempts a builder who is a natural person building “a dwelling for the builder as his or her principal place of residence and not for immediate sale” — but only on a statutory declaration that they have not obtained a permit for residential building work in the previous 6 years. Take the exemption, then sell early, and sections 25F and 25FA are waiting.

Do you need workers compensation in Western Australia?

If you engage workers, yes — and “worker” is broader than your contracts say. Cover is mandatory for employers who engage workers under the Workers Compensation and Injury Management Act 2023, with the term defined in section 12.

WorkCover WA applies a two-step test. Step one is section 12(2)(a), a contract of service — the common law employee test, which WorkCover notes is in substance the same as the tests the ATO applies under PAYG. Step two is section 12(2)(c), a contract for the performance of work, catching a contractor where all three hold: the work is not in the course of or incidental to a trade or business regularly carried on by that individual in their own or a business name; they do not sublet the contract; and if they employ a worker, they perform part of the work personally.

Nothing in section 12 mentions an ABN, an invoice or a written contract, which is the point. WorkCover WA’s own guidance is that whether a contractor has an ABN is not indicative of either coverage or exclusion. The arrangement decides it.

Section 202(2) then states the duty in six words: “An employer must at all times have a current workers compensation policy issued by a licensed insurer.” And section 17(1) makes the underlying liability independent of it — “An employer is liable for compensation if a worker suffers an injury from employment with the employer.” No policy, no declared remuneration, no renewal: the liability lands anyway, and Part 5 Division 7 simply labels you an uninsured employer and lets WorkCover WA pay the worker from the Default Insurance Fund and come after you.

The penalties are scaled to headcount, which is the detail sole operators who take on a first hand miss:

Provision	Consequence
s. 204(1)	A fine of $10,000 in respect of each of the employer’s workers to whom the offence relates
s. 204(2)	A separate further offence, at the same rate, for each week the failure continues after conviction
s. 207	On conviction the court must order repayment of every premium avoided “during the period of 5 years before the conviction”

Section 207 is the one that turns a lapse into a business event. It is mandatory, not discretionary, it reaches back five years, and where WorkCover WA lacks information to calculate the premium exactly, its own estimate “is presumed to be accurate” unless you produce better figures.

Unlike the eastern states, WA runs no single public insurer. WorkCover WA regulates, approved private insurers write the policies, and under section 253 WorkCover WA makes an industry classification order distinguishing “industries that have different insurable risks,” then fixes a recommended premium rate for each classification. Those rates are recommended, not binding — an insurer may quote away from them — and section 253(4) provides that they “must be published by WorkCover WA on the WorkCover WA website and do not have effect until published.”

That structure matters more than any single year’s number. Rates are set per industry classification, they are revised annually ahead of the 30 June policy renewal cycle, and the spread between construction classifications is wide enough that pricing a carpentry hour like a house-construction hour will quietly cost you. Pull the current schedule for your own classification from WorkCover WA before you price a job, and re-check it each financial year.

Can a sole trader insure themselves through the WA scheme?

No — and this is an exclusion built into the Act’s architecture, not an exemption you could waive. Section 12(2) makes an individual a worker only by reference to a contract with a person, and section 12(3) makes that other person the employer. A sole trader has no counterparty to be their employer, so there is no employment relationship for the scheme to attach to. Section 202 then requires employers to insure. A sole trader is not an employer of themselves, and cannot buy their way in. Partners are in the same position for their own work.

That is a gap, not a saving. Trading as a sole trader here, your income while you are off the tools comes from personal accident or income protection cover bought privately, or from nothing at all.

Incorporating changes the answer, but only on terms. Section 16 defines a working director as a company director who does work for the company and whose remuneration “is in substance for personal manual labour or services,” then says flatly that “a working director is not a worker for the purposes of this Act except to the extent that this section provides otherwise.” The carve-in is section 16(3) and (4): the company must apply for the issue or renewal of the policy on the basis that the working director is a worker, and must comply with the insurance information requirements in section 203 — naming the director and estimating, then reconciling, their remuneration.

Miss that reconciliation and section 16(5) removes the cover: the director “ceases to be a worker” until the company gives the insurer the missing information. So in WA, incorporating buys you access to the scheme, and your bookkeeping is what keeps you inside it.

Is liability insurance or a bond required for registration?

Neither, for a building contractor — and the regulations say so in a way worth reading closely, because section 18(1) of the Building Services (Registration) Act 2011 lets the Board impose both “financial requirements, if any, prescribed by the regulations” and “insurance requirements, if any, prescribed by the regulations.” Those are separate powers, and WA has used them unevenly.

For building contractors, regulation 18 prescribes a solvency test and nothing more: the applicant “must have the capacity to meet debts as and when they fall due.” In assessing that, the Board “may have regard to” the applicant’s net assets, liquid funds, loan or overdraft facilities, equity in property or non-current assets a loan could be raised against, “the proposed scale of operation of the applicant,” and any other relevant consideration. There is no prescribed cash figure and no prescribed liquidity ratio — if you have been quoted a fixed dollar threshold, ask which instrument it comes from, because it is not this one. Note the fourth-last item especially: scale of operation is explicitly in the test, so what counts as adequate for a one-person renovation business is not what counts for a volume builder.

And there is no insurance requirement prescribed for building contractors at all. The regulations do prescribe insurance requirements for building surveying contractors (regulation 28F) and building engineering contractors (regulation 28O). The absence in the builder’s case is deliberate drafting, not an oversight — for builders, HII carries that load instead.

Registration is granted “for a period of 3 years” under regulation 7(1), with a renewal window opening 12 weeks before expiry. Partnerships and companies need a nominated supervisor who is a registered building practitioner, and carrying out work without one attracts a $25,000 fine under section 22(2).

Public liability enters through a different door entirely. Under regulation 36 of the Electricity (Licensing) Regulations 1991, an electrical contractor’s licence may be issued only if the individual, firm or body corporate “holds a current policy of insurance against civil liability, in respect of the individual’s work as an electrical contractor, that complies with the requirements specified by the Board.” Details of that prescribed policy must be given with the application and again on renewal, and regulation 44A lets the Board demand them at any time in writing.

Then read regulation 43(3), which has no equivalent in the builder’s regime: “An electrical contractor’s licence is, by operation of this subregulation, suspended during any period for which the prescribed policy of insurance is not held.” No hearing, no notice, no decision to appeal. Let the policy lapse for a fortnight and you were unlicensed for a fortnight. Whether liability cover is legally required in WA depends entirely on which licence you hold — and for electrical contractors it is not merely required, it is load-bearing.

What records does WA leave you carrying?

HII certificates matched to permit applications, and completion dates that start a six-year clock. Certificates of currency in the right legal name. Declared remuneration for any working director. Subcontractor arrangements documented well enough to survive a section 12 assessment. Plus invoices, receipts and kilometres — see self-employed tax deductions and independent contractor mileage log.

Keel: Invoice Maker & Receipts, by Ilura Technology OÜ, handles that financial trail. It runs entirely on your iPhone — no account, no bank connection, no cloud sync — and its App Store privacy label reads “Data Not Collected.”

Say the limit out loud: Keel is a record keeper, not a compliance tool. It does not arrange HII, take out a workers compensation policy, register you with the Building Services Board or lodge with the ATO. It issues numbered PDF invoices with your logo and a payment-link QR code, reads receipts on device using Apple Intelligence, logs mileage, and keeps it all in an append-only, hash-chained ledger the Accountant Pack exports as one file per year.

Free covers unlimited invoices, receipts and mileage. Keel Pro is a one-time $249.99 Lifetime purchase, not a subscription. Keel on the App Store.

Frequently asked questions

When do I need home indemnity insurance in Western Australia? When the cost of residential building work is more than $20,000, the threshold prescribed by regulation 7 of the Home Building Contracts Regulations 1992. Section 25C(2) requires the builder to give the owner an approved certificate before any demand for payment, “including any deposit,” so the policy comes before the money.

Does a subcontractor need home indemnity insurance in WA? No, where you work under a contract with a registered builder. Section 25A excludes from both “building contract” and “residential building work contract” any contract for a builder to perform residential building work for another builder who is in turn obliged to perform it under another contract. Contracting directly with the homeowner changes that answer entirely.

Am I covered by workers compensation as a sole trader in WA? No, and you cannot opt in. Section 12 of the Workers Compensation and Injury Management Act 2023 makes someone a worker only through a contract with another person who becomes their employer, and section 202 obliges employers to insure. A sole trader has neither, so private income protection or personal accident cover is the only substitute.

What is the penalty for not having workers compensation insurance in WA? Section 204(1) sets a fine of $10,000 in respect of each worker the offence relates to, and section 204(2) makes each week after conviction a separate further offence at the same rate. On conviction the court must also order repayment of premiums avoided over the five years before the conviction, under section 207.

How much does HII pay out if my business fails? Up to $200,000 for completion and defective work, or the cost of the building work if that is lower, plus up to $40,000 for loss of deposit. Regulation 5 lets the policy exclude the insurer’s liability for up to $500. Claims run for six years from practical completion, and none of it reduces your own liability meanwhile.

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This article is general information, not legal or tax advice. Rules change — confirm with the authority named above.