When you’re buying a home there are a lot of things on the to do list. From researching suburbs to figuring out school catchments to saving for a deposit. But one thing people often overlook is the need for property insurance.

The fact is that insurance is an important part of the home buying process. But it’s one of the least understood. Many of our clients come to us wondering if they really need insurance. More importantly they want to know the details – when, why and what. And we’re here to answer those questions – because when it comes to buying a home, property insurance matters.

Property insurance during the home buying process

While property insurance is generally required when you purchase a home it’s not actually mandated by law. In other words, there’s no legal requirement for you to have property insurance at any stage of your purchase. However, for all practical purposes you can consider it a requirement because it is generally a condition of the lender.

So, while legally you can own a home without homeowner’s insurance, in most cases your lender (who has a financial interest in your home) will require it to be insured. And you will likely want insurance for your own protection as well.

Details of property insurance during the home buying process

When

When it comes to determining when you will need to procure property insurance on your new property the first place to look is your policy. This will tell you what is required, when.

However, when it comes to protecting yourself, you need to look beyond the policy, and consider your own risk. And your own risk depends on when you legally become responsible for the property. Because the moment you become responsible for the property, is the moment when risk attaches.

So, when do you become responsible for a property during the purchase process?

Australian Capital Territory, South Australia & Tasmania

In the Australian Capital Territory, South Australia and Tasmania the responsibility for a property generally rests with the buyer from the moment the contract is signed. Because of that it makes the most sense to ensure you have property insurance in place at the same time. If you don’t have it sorted before the exchange of contracts, you might be on the hook for damage to the property (for example, from flooding or storms).

Queensland

In Queensland, the buyer becomes responsible for the property from 5pm on the next business day following the signing of the contract for sale. This gives the purchaser (you) a little extra breathing room to organise your insurance. But as with the other states, the sooner you accomplish this task the safer you will feel and be.

Victoria & New South Wales

In Victoria and New South Wales, the buyer becomes responsible for the property from the settlement date rather than once the contract is signed. So, technically, during the time period between the execution of the contract of sale and the final settlement, the seller remains responsible for the property.

However, don’t delay in getting your property insurance as the settlement date can come quickly. And you certainly don’t want to be caught unprepared.

Western Australia & the Northern Territory

In Western Australia and the Northern Territory the buyer becomes responsible for any damage to the property from the earliest of:

• The date the buyer is entitled to or given possession, or
• The date the full purchase price is paid.

This means that you will need to be prepared with your property insurance soon after signing the contract, and certainly before the settlement date (as this is the time when your lender will transfer the full payment price to the vendor).

Why

Why does it matter when you get property insurance? Well, it matters because you need to be aware of how to protect yourself. And, most importantly, how to protect your newly acquired property. The moment that the responsibility passes to you, you will also be required to undertake any maintenance or repairs on the property or fix any damage that might occur. Without insurance this could be a very expensive undertaking in many situations.

What

Ensuring that you have the right insurance cover can certainly alleviate any worry that you might have – as well as put you in an excellent position with your lender. Determining the right insurance for your needs comes down to ensuring you’re covered for a variety of possible events and for the right amount.

At Lending Loop, we have a wide range of carefully curated home insurance options. Our experts are on hand to help you choose the policy that gets you the protection and peace of mind you need, at an excellent price. And with our experienced team on hand, you can be confident that you’re getting the best result quickly and seamlessly.

From home and contents cover to building insurance, we have the right policy for you. Get in touch with our expert insurance broking team to find out how we can help you get the cover you need when you need it.