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Getting insurance when buying a house

October 25, 2012

Many people do not realize that they need to get insurance on their new property before settlement occurs. It is the sort of risk that is difficult to fully appreciate but is capable of sending you broke or bankrupt.

If your new home burns down before settlement, then without insurance you may end up purchasing a property at top dollar that is only a pile of rubble and ash. Your bank or lender may also revoke finance approval, putting you in breach of the sale contract.

The risk of damage to a house becomes the purchaser’s responsibility as soon as the contract is signed and before any cooling off period expires. Depending on the wording of the contract, the vendor (seller) is usually not required to repair damage or replace property unless the vendor has acted unreasonably.

You also can’t rely on the vendor’s own insurance (if any) as that will not be paid to you.

You shouldn’t wait until the cooling off period expires to get insurance. Many people do this, on the basis that they might be able to use their cooling off rights to walk away from the contract if something happens during that short period.

But that assumes that the vendor or the agent will inform you if the house burns down, a car crashes through the front room or the pipes are stolen.

Insurance will not cover you for anything that happens before the policy comes into effect, which means that if there is something which has happened to the property that you are not told about before you get insurance or make your decision about whether to cool off, then you will be unprotected.

There may also be an overnight gap period between the end of the cooling off period and getting your insurance where you are still at risk. It is therefore highly recommended that all purchasers obtain insurance before or immediately upon signing the contract.

We at Conveyancing Solutions provide excellent service to our every customer. Please call us @ (02) 9387 2111 or (02) 9572 7400 to get a quote!

Credits: andersons.com.au

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