Insuring Your New Home: When To Start

When to insure your new house depends on a few factors, including the state or territory in which the property is located, the specific contract drawn up, and the recommendations of your conveyancer or lawyer. While it is not a legal requirement to insure your new house before settlement, it is often recommended by legal professionals and may even be required by your lender. In some states, like Queensland, the buyer is responsible for the property from 5 pm on the next business day after both parties have signed the contract. In other states, like Victoria and New South Wales, the buyer is responsible for any damage from the settlement date. It is essential to review the contract and understand the local laws to determine when insurance is needed.

When to insure a new house in Queensland

When you're buying a new house in Queensland, it's important to consider when to take out home insurance. While it's not a legal requirement to have home insurance, it is risky to be without it. Lenders may also insist that you have home insurance before they grant you a home loan.

In Queensland, the buyer generally becomes responsible for the property from 5 pm on the next business day after both parties have signed the contract. This means that if there is any damage to the property after this time, the buyer is responsible for covering the costs of repairs. Therefore, it is recommended that you take out home insurance as soon as possible after the contract is signed to avoid being liable for any damage that may occur.

The specific contract drawn up for the purchase may also have an impact on when you need to take out insurance, so it is important to carefully review the details and seek legal advice if needed. Additionally, if your new home is part of a strata scheme or community titles scheme, there may be additional insurance considerations. In these cases, the body corporate or owner's corporation typically takes out insurance for any common property, but you will still need to insure your own unit or lot and its contents.

To find the right insurer for your new house in Queensland, you can shop around and compare policies from different insurance companies. You may also want to consider using an insurance broker to help you find the best option for your needs. Remember to choose the right level of cover and consider optional extras like flood or accidental damage cover, depending on your home's location and specific needs.

In summary, while the decision of when to insure your new house in Queensland depends on a few factors, it is generally advisable to arrange home insurance as soon as possible after signing the contract to ensure you are protected in case any damage occurs to the property.

When to insure a new house in Victoria and New South Wales

In Victoria and New South Wales, the buyer of a new house becomes responsible for any damage to the property from the settlement date. This means that the vendor is technically responsible for the property's upkeep until the settlement date. However, it is recommended that buyers get insurance from the time the seller signs the contract to err on the side of caution. While it is not a legal requirement, your mortgage lender may expect you to take out insurance before settlement.

The standard contract of sale for residential properties states that the property remains at the risk of the vendor until settlement. There is no concurrent obligation for the vendor to maintain insurance unless the property is sold on terms, which is unusual. Many purchasers save money by not taking out insurance before settlement, but this can lead to significant risk if the property is damaged by fire or vandals. If significant damage occurs, the purchaser may be forced to settle with a cash adjustment or attempt to avoid the contract if the damage is severe.

To avoid potential issues, both parties should arrange insurance. Even if the vendor has insurance, which the purchaser won't know, it is advisable for the purchaser to take out cover during the pre-settlement period. Some lenders and associated insurers provide this cover for free if the policy is taken out from the settlement date onwards by the purchaser.

In summary, while the property is technically the responsibility of the vendor until the settlement date in Victoria and New South Wales, it is recommended that buyers arrange insurance from the time the contract is signed to ensure they are covered in case of any damage to the property.

When to insure a new house in the Australian Capital Territory, Tasmania, and South Australia

In the Australian Capital Territory, Tasmania, and South Australia, the responsibility for any damage to a property usually rests with the buyer during the settlement period. This means that, if you're the buyer, you'll need to have your insurance sorted before the exchange of contracts, otherwise, you may have to pay for any reasonable damage sustained to the property out of your own pocket.

After both parties have signed the contract, the buyer becomes responsible for the property from 5 pm on the next business day. They are then responsible for covering any damage to the property after this time.

Therefore, it is recommended that you take out a home insurance policy before the contract date. While home insurance is not a legal requirement, your conveyancer or lawyer will likely recommend taking it out once you've signed your contract. Your mortgage lender may also expect you to take out insurance before settlement.

When to insure a new house in Western Australia and the Northern Territory

When buying a new home, it is vital to know the requirements for insuring it. In Australia, the settlement process is the period between the exchange of contracts and settlement, usually around six weeks. During this time, the buyer can arrange finance, organise insurance, and request repairs or improvements.

The laws and regulations governing when a buyer becomes liable for home insurance vary between states and territories. In some cases, you may be required by law to have home insurance before the settlement date, when you take possession of the property. In other cases, it might be okay to wait until the date of settlement to purchase your policy.

In Western Australia and the Northern Territory, the buyer assumes responsibility for the property at one of two times, whichever comes first:

• On the date the buyer is entitled to or given possession
• On the date that the full purchase price is paid

In the Northern Territory, owners of new homes must have residential building cover as protection from defective or incomplete work. This includes duplexes, units in complexes up to three stories in height (excluding undercroft or underground parking levels), and extensions or renovations to those buildings.

While having home insurance is not a legal requirement, your conveyancer or lawyer will likely recommend taking it out once you've signed your contract. It may even be required by your lender before your home loan becomes unconditional.

When to insure a new house in a strata scheme

Strata insurance and building insurance are often used interchangeably, but they are slightly different. Strata insurance policies cover the building, common property, common contents, fixtures and fittings, and public liability insurance for common property areas. It is mandatory in New South Wales and South Australia.

In New South Wales, the owners' corporation is legally required to take out strata insurance cover for the building, common property, and common contents managed by the owners' corporation. The strata manager must provide the owners' corporation with at least three written quotes from different insurers when renewing a policy.

In South Australia, the Corporation is responsible for insuring the common property and common building(s) for full replacement value. Fidelity guarantee insurance and public liability insurance are also mandatory.

The building insurance will be part of the strata insurance taken out by your building as a whole. Therefore, each owner will not need to take out their own individual building insurance if living in a strata building.

However, if you own a commercial unit in a strata scheme, you may be responsible for insuring your own business contents and public liability cover. It is always best to check with your specific strata scheme.

The treasurer is responsible for managing finances and insurance, if this job has not been delegated to the strata manager. In New South Wales, strata managers must disclose at Annual General Meetings (AGMs) the value of insurance commissions they receive, if applicable.

Frequently asked questions