Arch Insurance Co., the bonding company for Equity Homes, a Fairfax, Va.-based home builder, has agreed to pay $460,000 to settle consumer claims regarding deposits on new homes.

Equity Homes accepted deposits from consumers to build new homes, but never built the homes or refunded the money, according to the Maryland Attorney General’s Office.

The attorney general’s Consumer Protection Division will distribute the money to consumers who are owed refunds from the builder, who went out of business in February 2008.

Equity Homes had obtained a $500,000 bond from Arch Insurance Co. as required under Maryland law for protection of deposits and other payments received from consumers. Following an investigation, the Consumer Protection Division determined that consumers had paid deposits and other payments to Equity Homes that were not refunded.

“Under Maryland law, a home builder is liable to consumers if it fails to build consumers’ homes,” said Attorney General Douglas F. Gansler in a statement. “I am pleased that consumers were protected under Maryland law and that we were able to help get consumers their money back.”

If consumers believe they are due a refund of a deposit or payment from Equity Homes and have not been contacted by the Consumer Protection Division, they should contact the Division at 410-576-6569 by Sept. 10.

Arch Insurance is a member of Arch Capital Group Ltd., a Bermuda-based company that provides insurance and reinsurance on a worldwide basis through its wholly owned subsidiaries.