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Do I Need Home Insurance Before Settlement?
Do I Need Home Insurance Before Settlement?
Written by
Tina Sendin
Edited by
Ellie Garran
Reviewed by
Adrian BennettCompare home and contents insurance the easy way
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Long story short
Know when your responsibility kicks in
Depending on the state, you could be liable for your property before settlement.
Owners of strata properties might still need cover
Strata insurance handles the building, but you still might want contents insurance or landlord cover.
Even off-the-plan owners need to prepare
Once construction wraps up, home insurance is your responsibility.
What’s settlement?
Settlement’s basically the legal handover where the property officially becomes yours. Think of the settlement day as ‘the big day’ – when the seller hands over the keys, and you (through your conveyancer or solicitor) hand over the rest of the cash (or the balance of the purchase price).
But let’s backtrack a bit.
Before the big day, you would’ve found yourself in a settlement period. This is the final stretch of buying a property after you’ve made an offer, paid the deposit, signed the contracts, and survived the cooling-off period.
Depending on where you’re buying, this period usually lasts between four and six weeks. Although if you’re keen to speed things up (or need a bit more time), you might be able to negotiate a shorter or longer settlement period with the seller.
Phew – that sounds like a lot of paperwork and admin! But you’ve finally done it. It’s time to pop the champagne!
What type of home insurance do I need for my property?
Not sure what kind of cover you need? Here’s a quick breakdown of the common types of home insurance:
Building insurance
This type of home insurance covers the structure of your home, including walls, roof, and fixtures like built-in wardrobes. If you’re buying a standalone house, building insurance protects it against damage caused by things like fires, storms, and vandalism. If you want to cover your bases, combining this with contents insurance is worthwhile.
Contents insurance
Contents insurance covers the belongings inside your home, such as furniture, appliances, and electronics. Standalone contents insurance is ideal for strata buyers who don’t need building insurance but want to protect their valuables.
Combined home and contents insurance
This type of home insurance combines building and contents insurance into one package. A combined home and contents policy offers you broader coverage for both your property and possessions. It’s most useful for houses, as strata properties have different insurance.
Landlord insurance
If you’re renting out your property, landlord insurance generally protects against property damage, unpaid rent, and liability claims from tenants.
Strata insurance
If you’re an apartment, townhouse, or unit owner in a strata plan, you’ll pay a regular strata levy. This fee covers the strata insurance alongside the costs of management and upkeep of the building and shared spaces.
You normally won’t have to worry about getting the actual strata insurance, as this is your body corporate’s job. However, you might want to complement this with other types of cover, say if you want protection for your prized possessions or plan to rent out your property down the line.
Is home insurance mandatory when I buy a property?
It depends on what sort of property you’re buying and what type of home insurance you’re talking about. Confused yet? Don’t worry; we spell it out right below.
Buying a house
Home insurance isn’t strictly mandatory in Australia – but if you’re borrowing money from a lender to finance your purchase, it’s highly likely they’ll require you to arrange building insurance before they release the funds. Why? Your lender needs to know the property (essentially their investment) is protected from damages caused by unexpected events.
Even if you’re not using a lender, getting coverage sorted early is a wise move. Because buying a house without home insurance? Sounds like a house of cards you wouldn’t want to build. You might want to consider the following types of home insurance for your house.
- Building insurance covers your property’s structure and even the outbuildings, like your shed or granny flat.
- Contents insurance protects your belongings. You can combine this with building insurance to get a combined home and contents policy.
- If you’re buying a house and planning to rent it out, you can add-on landlord cover can protect you from tenant-related dramas.
- If you’re planning to spruce up your new home, like adding new shelves for your bub’s nursery, you might want to double-check your home insurance policy for any potential gaps in cover relating to renovations.
Buying a strata property
Purchasing an apartment, townhouse, or unit in a strata scheme? The good news is that strata insurance typically covers the building itself (and common areas like pools and gardens). And this would’ve already been arranged by the body corporate (or owner’s corporation), as it’s a requirement for all strata properties around the country.
But here’s the catch: You might still want extra cover, especially if you want to protect your belongings or plan to rent out your new digs.
- While strata insurance covers the big stuff, you’ll still need to consider contents insurance to protect your belongings inside your unit, apartment, or townhouse.
- Since strata owners are also usually responsible for insuring the structures, fixtures and fittings inside their own space, contents cover with fittings and fixtures upgrade could also add more protection.
- You may want to consider landlord insurance if you’re renting out the property to tenants.
Buying off the plan
If you’re buying off the plan, things might work a little differently.
Depending on the state where you’re buying, builders’ warranty insurance (which your developer will take care of) could have you covered while your property’s being built. This means if any structural or interior faults pop up within a set timeframe, the builder’s responsible for fixing them.
Note that this only refers to buying off the plan; commissioning a build is a different story altogether.
However, once construction is complete and settlement occurs, your home becomes your responsibility. And if you want to protect probably one of your biggest – if not the biggest – purchases yet, then it only makes sense to get home insurance stat.
When’s a good time to get home insurance?
Now comes the big question. If you’re planning to get home insurance, when’s a good time to arrange it? Is it before, during, or after settlement? Well, the answer depends on your location and the type of home insurance you’re planning to get.
Building insurance
If you’re getting a loan to buy your place, chances are your lender will want you to sort out building insurance before they hand over the cash. They need to make sure their investment (aka your property) is covered in case something unexpected happens.
And while the state and territory governments don’t technically make building insurance a must, they’re pretty clear about when you become responsible for the property:
Victoria and New South Wales
The buyer takes responsibility for any damage from the settlement date.
The ACT, Tasmania and South Australia
The buyer’s on the hook for any damage during the settlement period.
Queensland
Once contracts are signed and exchanged, the buyer’s responsibility for the property starts from 5pm the next business day.
WA and the Northern Territory
The buyer’s responsible for insurance either:
- On the date they’re entitled to or given possession (like as an inheritance), or
- When the full purchase price is paid at settlement – whichever comes first.
No matter the rules in your state, you can choose to organise building insurance as soon as you’ve paid the deposit.
Contents insurance
It’s a good idea to get contents insurance as soon as you start moving, to cover your belongings as soon as they’re in place. It’s also worth checking your policy’s rules around moving house – if your TV gets smashed en route, you don’t want any surprises about who’s replacing it!
Strata insurance
Now, if we’re talking about strata insurance, then you usually won’t have to worry about it, as your body corporate (or owners corporation) is in charge of this. You’ll only have to pay the strata fees, which are what owners in the complex divvy up to cover the cost of insuring and maintaining the building and shared properties.
However, you might want to consider getting coverage for the stuff found inside your own unit, townhouse, or apartment (which is where contents insurance can come in).
Helpful tip
It’s always a good idea to chat with your conveyancer or solicitor about when to sort out building insurance for your new place, as they can advise you on when’s a good time.
Even if your state doesn’t require insurance before settlement (like NSW or VIC), arranging it early ensures peace of mind. After all, freak accidents, storms, or vandalism don’t care what the law says about liability timelines!
Adrian Bennett
General Manager for General Insurance
When does a policy take effect?
Most home insurance policies can be activated immediately or scheduled to start from your desired date (e.g., settlement day). This is especially handy if you’re arranging pre-settlement insurance weeks in advance.
Protect your new home today
Buying a property is a massive milestone, and the last thing you need is something unexpected throwing a spanner in the works. Wherever in the country you’re buying, sorting out home insurance before you become legally responsible for your property means it’s protected from day one.
By the time you sign the contracts, you’ve already tackled a mountain of admin and paperwork – exhausting, right? Adding home insurance to your to-do list might feel like just another chore. That’s where we come in.
With the iSelect comparison tool, we can help you compare policies and find cover that matches your budget. So you can finally kick back and start making your new place feel like home.
Get started on comparing home and contents today!
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