Why do you need home insurance when you don’t own the property?
When you sign a contract to purchase a house or unit, one of the first things your solicitor will tell you to do is – take out insurance.
Many people don’t realise that under a standard REIQ Contract, which is the main form of contract for residential house sales in Queensland, the property is at the risk of the buyer from 5pm on the first business day after the contract date. This risk is not only for property damage but also personal injury.
If the property is damaged between the contract date and settlement date, the buyer is obliged to go ahead with settlement. Although the seller usually has insurance in place until settlement, it is very important that the buyer also take out insurance to protect their interests should the worst occur.
What kind of insurance will you need?
Although it will depend on what you are buying, as a general rule you will need:
- Building, contents and public liability insurance if you are buying a house.
- If you are buying a unit in a Community Title scheme you will need to insure the contents of the unit (including floor coverings and window furnishings) as well as public liability insurance for the interior of the lot. If you are purchasing the unit as an investment property to rent, you may also need to consider landlord’s insurance. As part of your conveyance you can request your solicitors do a search to ensure that the Body Corporate has maintained an up-to-date and comprehensive Strata Building Insurance Policy for the CTS.
- If you are buying a vacant block then public liability insurance is recommended until the house is built and then comprehensive building and contents insurance should be taken out.
It is very important to organise insurance immediately after you sign a contract. If you have any questions about risk or insurance, please feel free to contact the SPM Law team.