What insurance do you need when buying a house?

When buying a home, when do you become responsible for damage to the property?

When a home buyer becomes responsible for damage to a property can vary depending on which state or territory you live in and your particular contract of sale. Each state has its own standard position as to when the risk of damage to the property normally passes from the seller to the buyer. In most parts of the country, this will either be when the buyer and seller exchange signed contracts or at settlement. Settlement is when ownership of the property transfers from the seller to the buyer and the buyer pays the balance of the sale price.

Here are the standard positions that typically apply in each state and territory:

• NSW: buyer is responsible for damage to the property on settlement.
• VIC: buyer is responsible for damage to the property on settlement.
• QLD: buyer is responsible for damage to the property from 5pm the next business day after the contract date (this is before settlement).
• SA: buyer is responsible for damage to the property as soon as contracts are exchanged.
• WA: buyer is responsible for damage to the property on either the date the whole purchase price is paid or the date the buyer is entitled to or is given possession of the property (whichever comes first).
• ACT: buyer is responsible for damage to the property as soon as contracts are exchanged.
• TAS: buyer is responsible for damage to the property as soon contracts are exchanged.
• NT: buyer is responsible for damage to the property on either the date the whole purchase price is paid or the date the buyer is entitled to or is given possession of the property (whichever comes first).

Your contract of sale may be different to this and may pass the risk to you (the buyer) at a different time. It’s important to check your contract and speak to your solicitor or conveyancer to see what applies to you.

Compare Home and Contents Insurance with Canstar

If you’re comparing home and contents insurance policies, the comparison table below displays some of the policies currently available on Canstar’s database for an Australian aged under 50, seeking cover in NSW or the ACT for a cost to replace building and contents of below $550,000. Please note the table is sorted by Star Rating (highest to lowest), followed by provider name (alphabetical) and features links direct to the providers’ websites. Consider the Product Disclosure Statement (PDS) and Target Market Determination (TMD), before making a purchase decision. Contact the product issuer directly for a copy of the PDS and TMD. Use Canstar’s home insurance comparison selector to view a wider range of policies. Canstar may earn a fee for referrals.

When should I get home insurance?

It is not a legal requirement to have home insurance, but you may want to purchase it for your peace of mind or at your lender’s request. Your lawyer or conveyancer may recommend that you take out insurance when you exchange signed copies of the contract with the seller. Even if the seller’s insurance covers the property until settlement, this might still be worth doing to protect your interests and in case the seller does not have adequate insurance in place.

If you have a home loan, it may also be a condition of your loan that you take out home insurance. For example, your lender may require you to take out building insurance that is effective from the date you sign the contract or before the loan becomes unconditional. Check with your home loan provider to see if this applies to you and from what point your home needs to be insured.

If you are buying a strata title apartment, you typically will not need to purchase building insurance as it will be covered by residential strata insurance. The cost of this cover is usually included in your building levies. However, you may still want to take out contents insurance to cover your belongings.

If you’re thinking about taking out home and/or contents insurance, you can compare a range of policies with Canstar. If you’re wondering how much it’ll cost you, we’ve also written about the average cost of home and contents insurance around Australia.

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