Do I need to insure my new home before settlement?

Whether or not you need to insure a new property before settlement generally depends on what state or territory you live in.

And though having home insurance isn’t a legal requirement, your conveyancer or lawyer will likely recommend taking it out once you’ve signed your contract. It may even be required by your lender before your home loan becomes unconditional.

So, now you’ve done the hard part and purchased a new home, it’s time to consider the level of home insurance that’s right for your new property.

What is property settlement?

When you agree to purchase a property, you’ll sign a contract with the vendor and enter a settlement period. Property settlement is the last piece of the home buying puzzle, where you (the buyer) pay the contracted amount to the person or organisation selling the property. It’s at this point that ownership of the house legally changes.

In Australia, settlement periods are negotiable but often last for 30, 60 or 90 days. The most common settlement period is 60 days, except in NSW where settlement is usually 42 days. This amount of time is meant to be adequate for both the buyer and seller to organise the things that need doing before settlement, such as:

• securing a home loan
• finalising paperwork, and
• cleaning.

Your conveyancer or lawyer will be able to advise what is specifically required for property settlement in your state or territory. 

When should I take out a home insurance policy?

Identifying the party responsible for ensuring a property has home insurance cover once it’s sold depends on your contract and the state or territory you live in. In some states, the legislation around this issue isn’t clear, so the information provided here is based on standard contracts.

That said, what’s decided between the buyer and seller is the ultimate source of truth and any questions about this should be directed to your conveyancer or lawyer.

So, at what point in the settlement period will you need to take out a home insurance policy?

Australian Capital Territory, South Australia and Tasmania

In the ACT, SA and Tassie, the responsibility for any damage usually rests with the buyer during the settlement period. If you’re the buyer, you’ll need to have your insurance sorted before the exchange of contracts, otherwise you may have to pay for any reasonable damage sustained to the property (such as from a weather event like a storm) out of your own pocket.

Queensland

After both parties have signed the contract, the buyer becomes responsible for the property from 5pm on the next business day. They’re responsible for covering any damage to it after this time.

Victoria and New South Wales

The buyer becomes responsible for any damage to the property from the settlement date. That means, technically, the vendor is responsible up until this point. However, you may find it useful to err on the side of caution and have your insurance arranged from the time the contracts are signed.

Western Australia and the Northern Territory

In WA and the NT, the buyer assumes responsibility for the property at one of two times (whichever comes first):

• on the date the buyer is entitled to or given possession, or
• on the date that the full purchase price is paid.

A note on strata insurance

Strata insurance provides cover to a building or common property that forms part of a strata scheme. It’s usually taken out by an owner’s corporation. If your new home is part of an apartment complex managed by a body corporate, for example, strata insurance is the responsibility of the owner’s corporation, and should be in place before the property is sold.

You may find it useful to ask your conveyancer or lawyer what’s covered by this type of insurance, as it’s unlikely to cover the personal possessions inside your home (the same goes for Building Insurance). If you require coverage for your contents, consider Contents Insurance.

Choosing the right cover

A little peace of mind can go a long way. Choosing the right home insurance policy ensures you’re covered for a variety of insured events and helps you avoid underinsurance.

GIO offers a range of home insurance options, from Building Insurance and Contents Insurance to combined Home and Contents cover, so you can choose the policy that’s best for you. What's more, you’ll get 10% Off Your First Year When You Buy Online!*.

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Read more:

• 4 ways to reduce your Home Insurance premium
• What does GIO Home and Contents Insurance cover?
• How to get portable valuables insurance with GIO

Insurance issued by AAI Limited ABN 48 005 297 807 trading as GIO. Consider the Product Disclosure Statement before buying this insurance. This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it.

*If you’re eligible for more than one discount, we apply them in a pre-set order to the discounted premium, before government taxes and charges.
^Discount not applicable to GIO Roadside Assist, GIO Home Assist, Excess-free Glass or Domestic Workers Compensation optional covers.