Insurance before and after settlement

When buying property, insurance responsibilities often begin earlier than buyers expect.

From the moment contracts are exchanged to long after settlement, understanding what needs to be insured, and when, protects both your deposit and your long-term asset.

Insurance isn’t an afterthought. It’s part of responsible ownership.

In Australia, the point at which risk transfers from seller to buyer varies by state.

In some states, risk passes to the buyer at exchange. In others, it transfers at settlement.

That distinction matters.

If risk passes at exchange and the property is damaged before settlement, you may still be required to proceed with the purchase.

Because rules differ between states and territories, confirm with your conveyancer exactly when risk transfers in your location.

When in doubt, insure early.

If you are purchasing a freestanding home, most lenders require building insurance before settlement.

This typically needs to be in place:

• Before or at exchange in some states
• Before settlement in others
• Prior to loan funds being released

Your lender may request a certificate of currency as part of final loan approval.

Building insurance generally covers:

• Fire
• Storm damage
• Flood, depending on policy
• Accidental damage
• Structural damage

Coverage should reflect the rebuild cost, not just the purchase price.

If you are purchasing an apartment or townhouse within a strata scheme:

• The building itself is usually insured under the strata policy
• You are responsible for contents insurance

However, it’s important to:

• Review the strata insurance policy
• Confirm coverage levels
• Understand any exclusions

Strata insurance does not cover your personal belongings or internal upgrades unless specified.

Contents insurance covers:

• Furniture
• Appliances
• Electronics
• Personal belongings

Even before moving in, contents cover may be required if you are storing items at the property.

Contents insurance is not mandatory for lenders, but it protects your personal assets.

If you are purchasing as an investment property, landlord insurance is essential.

It typically covers:

• Tenant damage
• Loss of rental income
• Liability claims
• Legal expenses

Standard building insurance does not provide these protections.

Landlord insurance should be in place before tenants move in, or immediately upon settlement if a tenant is already in place.

Once settlement is complete:

• Confirm your policy is active
• Update the insurer if you make renovations
• Review coverage annually
• Adjust sum insured as property values change

Underinsurance is common. Rebuild costs can exceed purchase price, especially in high-demand construction markets.

Reviewing your policy each year protects against gaps.

Some common oversights include:

• Waiting until after settlement to arrange insurance
• Insuring for purchase price rather than rebuild cost
• Assuming strata covers contents
• Forgetting landlord insurance for investment properties
• Not disclosing renovations or changes

Insurance is only effective if structured correctly.

Premiums vary based on:

• Location and flood or bushfire risk
• Property age and construction type
• Coverage inclusions
• Excess levels

For example, annual building insurance premiums may range from $1,200 to $3,000 depending on risk factors.

Higher-risk zones may attract significantly higher premiums.