Do I Need to Get Pre Settlement Home Insurance?
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 from 5pm on the first business day after the contract date. This means that ensuring you have a comprehensive pre settlement home insurance policy is vital to protecting you against any accidental losses or damage before you move in.
WHY DO YOU NEED Pre Settlement HOME INSURANCE WHEN YOU DON’T OWN THE PROPERTY?
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 take out public liability insurance for the interior of the Lot.
The Body Corporate is responsible for insuring the common property and body corporate assets and having public liability insurance for the common areas.
The Body Corporate may also be responsible for insuring the building structure, depending on whether the property is on a Standard Format Plan or Building Format Plan, whether there are shared or common walls and whether the body corporate committee has resolved to establish a voluntary insurance scheme (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 should also consider obtaining landlords insurance. This can be taken out after settlement.
If a portion of the property will be used for non-residential purposes (eg to run a business from home), you will need to disclose this to your insurer. We recommend discussing with your insurance provider prior to signing a contract to ensure you can obtain the necessary 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.
If you’re looking for a trusted conveyancing lawyer for guidance about organising pre settlement home insurance, get in touch with MAP Lawyers today! Call us today on 1300 680 584, or send us a message.
Updated: 18/08/2023
