Home > FAQ

Why do I have to insure the buildings before settlement?

When you sign a contract or contract note for the purchase of a property, you have what is known as an “insurable interest” in the property. Naturally, you will want to protect this interest.

While the seller of a property usually has certain obligations to provide the property to you as inspected (fair wear and tear excepted), there may be situations where you could be forced to accept a property that has been damaged where that damage may be able to be the subject of a claim under an insurance policy.

(For example, in some cases damage might occur that does not render a dwelling uninhabitable, and you may be forced to settle.)

You will not know whether the vendor keeps their policy current, or if the property has been insured at all, and some vendors might even cancel a policy when the property sells.

A lender often requires the borrower to arrange insurance cover, noting the lenders full name as “an interested party” or “as mortgagee”. Failure to provide a certificate from the insurer with the lender noted as an interested party can lead to a delay in settlement.

It is for these and other reasons that we recommend that you arrange building insurance as soon as a binding contract is signed.