buying in Victoria when to take out building insurance

Hi All,

i know in qld you do this at contract, but saw it's only required at settlement date for vic, what do most people do? contract date or settlement date?

 

Neither, I get it after contract signed. I dont think it is required at settement in VIc, but if you are using finance to settle the financier will probably want cover note before they will settle.

 

Hi @Elives

An insurer will not even declare that they are ready to book settlement unless you can provide proof of insurance, listing them as the financial interest. Some insurers "might" give you a policy that doesn't kick in till the planned settlement date, but not all. So without an insurance policy showing the lender on it (if indeed you are using borrowings to make your purchase), you will be unable to take ownership.

Either way, you need to assume that the vendor may not have adequate insurance, and if something happens to the place, that their policy may be insufficient to replace what is presently there. On the one hand, you could attend pre-settlement inspection and say "Um... I'm sure there was a house here before when I said I would buy it... this is just a pile of rubble from a fire.... this is not what I agreed to buy..." and then you'd consult your legal rep about your options. However even if you were able to exit the contract, you'd have to find another place you like, and be the successful offer/bidder and buy it, presumably in a market that has been rising in price since your last purchase. So much easier to just take out insurance straight after signing the contract of sale.

 

Ideally, it should be when you take the possession or on the settlement date. However, if you may sign the contract unconditionally where it obligates you to purchase the property regardless of its condition, you may want to buy it as soon as you sign the contract.

 

I always do settlement.

 

Lenders will require evidence of your insurance before the settlement date. I can't think of a mainstream lender that won't ask for a copy of the insurance certificate.

Most insurers will start the insurance at the settlement date, offering a complementry 'cover note' for the period prior. This means you're only paying for the insurance from settlement, but the insurer will cover you if the vendor doesn't have insurance if something occurs in the meantime (they'll also sue the vendor, knowing that they're like to be getting some cash from the settlement anyway).

Also worth noting is that many insurers won't offer insurance until about 6 weeks prior to settlement. I'd recommend getting insurance as soon as the contract is signed, but that may not be practical.