Generally, the property is at the buyer’s risk from 5:00pm on the first business day after the Contract Date. It is important you start making enquiries before you sign the contract, so you have ample time to just simply secure the option of an insurance company once the contract is signed to avoid delays in case you may be busy on the day to call around.

Even though the seller still has an obligation until settlement to take reasonable care of the property, the risk is yours as a buyer, so it is important you do your own due diligence by taking out insurance.

What happens if my property gets damaged before settlement?

If the property is damaged between the contract date and the settlement date for reasons such as extreme weather events, fire or vandalism, you must still settle despite the damage (unless the property is so destroyed or damaged as to be unfit for occupation).

If the damage is due to the seller not taking the required reasonable steps to care of the property, you may be able to ask the seller for compensation, however generally, you are usually unable to make a claim on the seller’s insurance or ask them to make a claim, which is why it is important you obtain your own insurance.

As the property is at the buyer’s risk, we recommend that property insurance is taken to cover building, contents and public liability. You should also advise the insurer you’ve entered into a contract and the details of the property type and location, so they can recommend the correct insurance for you to take out.

If you are obtaining finance, it will be necessary for the bank to be noted on the policy as mortgagee. The insurance broker or home insurance company should be able to attend to this for you.

What if I am unable to obtain insurance when I sign the contract?

Sometimes it is possible and unfortunate that the timing of signing the contract can fall during bad times such as extreme weather events, or cyclones where insurance companies may not be able to cover you due to warnings already being issued.

If this applies to you, then we would recommend you speak with us so we can guide you on what your options may be.

One of the ways to best try and protect yourself is by including a special condition whereby the risk of the property is the seller’s until the settlement date, which means the seller would need to make a claim if anything were to occur before settlement. In saying that, we still recommend you obtain your own insurance to be safe.

You may also wish to include a due diligence condition, where you can make enquiries with regards to the property and the insurance you can obtain, during the course of the conveyance, before you go unconditional.

Do I still need insurance if my property is within a body corporate?

In short, yes, you still need to take out your own insurance if your property is within a body corporate, as you will need insurance cover for your property’s contents (which will include carpets, curtains, internal blinds, etc.) and public liability insurance for the property’s interior.

If you are going to have tenants living in the property, you will also need landlord insurance and if the property is a stand-alone building, you should obtain insurance cover for the building, the contents of the property and public liability insurance for the property’s interior.

Some types of properties within a body corporate are created in different format plans of subdivisions whereby the body corporate must insure for either:

• full replacement value, each building in which a lot in the scheme is located;
• a building where there is a common wall with an adjoining lot, for full replacement value, each building that has a common wall with a building on an adjoining property;
• for stand-alone buildings, a voluntary insurance scheme under which it puts in place insurance over stand-alone buildings for the owners of the properties on which they are located.

The body corporate is also responsible for insuring against public liability for the common property and any relevant body corporate assets, but not for each individual property.

If you are a potential buyer getting cold feet or sweating over entering into a contract, contact us. We will be able to walk you through the process and make sure that you’ve got all the conditions and timeframes you need to protect you by ensuring that you make all enquiries in relation to your purchase and to remind you of when the property is at your risk.