Do I Need to Get House Insurance Before Settlement?
This is an important issue and we certainly recommend that you do insure a property to protect your interest in it prior to settlement.
Why do you need home insurance when you don’t own the property?
Under a standard REIQ Contract, which is the main form of contract for residential house sales in Queensland, the property is at the risk of the buyer on the first business day after the contract date.
If the property is damaged between the contract date and settlement, the buyer is obliged to continue with settlement. Although the seller usually has insurance in place until settlement, it is strongly advisable that the buyer also take out insurance should the worst occur.
What kind of insurance do I need?
It depends on what you are buying. Generally speaking, if you are buying a house, you will need building, contents and public liability insurance. If you are purchasing a unit in a Community Title Scheme, you will need to insure the contents of the unit (eg curtains, blinds, floor coverings) and public liability insurance for the interior of the Lot. The Body Corporate should insure the building and have public liability insurance in place for the common property areas.
If you are purchasing a unit in a Community Title Scheme where there is no shared or common walls, you will need to confirm whether the Body Corporate takes responsibility for insuring the buildings with the agreement of all lot owners. We can assist you with these enquiries during the conveyancing process. If in doubt, we suggest that you take out building insurance – after all, you are better to be over-insured than under.
If you are purchasing vacant land, you should take out public liability cover pending the construction of a building on the land. Once the building has been completed, a comprehensive insurance policy should be taken out.
If you are purchasing a property to rent to tenants, you may also consider whether you should obtain landlords insurance.
Your lender will often require you to arrange insurance cover, noting the lender’s full name as ‘interested party’ or ‘as mortgagee’. A failure to provide this certificate from the insurer with the lender noted as an interested party can lead to delays in settlement.