Forums / Property Investing / Help Needed! / Pre-Settlement Home Insurance

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  • Profile photo of wblackwblack
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    @wblack
    Join Date: 2010
    Post Count: 34

    Can anyone  advise if home insurance is required to cover the period between signing the contract and settlement date. Our insurance company aren't prepared to give us advice on this.

    Profile photo of number 8number 8
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    @number-8
    Join Date: 2010
    Post Count: 333

    No, You do not own the property until settlement. Have the building insurance set for settlement day… Congratulations anyway!!!!

    http://www.birchcorp.com.au

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 11,992

    Unless you are Qld and then YES it is definately required.

    Unfortunately many buyers found to their detriment in the recent Brisbane floods.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
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    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of number 8number 8
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    @number-8
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    Profile photo of wblackwblack
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    @wblack
    Join Date: 2010
    Post Count: 34

    Hmmmm, so it can't hurt to have it. We're in Victoria and no-one seems to know for sure if we should or shouldn't. Maybe better to be safe than sorry.

    Profile photo of Jacqui MiddletonJacqui Middleton
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    @jacm
    Join Date: 2009
    Post Count: 2,539

    I am in VIC.  You absolutely need it.  Imagine if the current owner hasn't bothered to insure the property, and it burns down after you've paid a big deposit but before settlement.  Your solicitor will confirm that you absolutely need it.  It's a small price to pay compared to the massive loss you'd be facing if something went wrong.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
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    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of wblackwblack
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    @wblack
    Join Date: 2010
    Post Count: 34

    Thank JacM, consider it done!!!

    Profile photo of Mick CMick C
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    @shape
    Join Date: 2010
    Post Count: 1,099
    wblack wrote:
    Can anyone  advise if home insurance is required to cover the period between signing the contract and settlement date. Our insurance company aren't prepared to give us advice on this.

    VIC and QLD = yes.
    NSW, ACT = at settlement

    Mick C | Shape Home Loans
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    Same Banks. Better Rates. Served With a Passion.

    Profile photo of wblackwblack
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    @wblack
    Join Date: 2010
    Post Count: 34

    Yes, advice from our legal people was: Building insurance should be in place from when the matter is unconditional
    and your finance has been approved to protect you as Purchaser.

    Profile photo of DerekDerek
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    @derek
    Join Date: 2004
    Post Count: 3,544

    Yet definitely need it in Vic after unconditional stage has been reached.

    Also recommended to have as soon as contracts have been signed by both parties. Might be a bit early but……………………<moderator: delete language>

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
    Join Date: 2010
    Post Count: 5,065

    Agree with the above, take it out. Besides, an extra month or two of premiums isn’t going to cost a great deal.

    Jamie Moore | Pass Go Home Loans Pty Ltd
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    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of fWordfWord
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    @fword
    Join Date: 2009
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    Based on personal experience, my bank required that I have insurance on the house (and even insured to their set value) before I can get a loan from them. This is in Victoria.

    Profile photo of DerekDerek
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    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi Fword,

    That is pretty standard for most (all?) banks.

    They do want proof of sufficient building coverage before they pass funds onto the purchaser. On top of this they also want their financial interest declared on the insurance policy.

    Not that different to cars where finance is involved.

    The key issue here is that in most states it is advisable to have building insurance in place often even before the loan is approved.

    Profile photo of pk747400pk747400
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    @pk747400
    Join Date: 2007
    Post Count: 2

    I have Just purchased a property in WA and will settle on the 11th March 2011. I have been advised by my legal rep that the insurance should be in place at the EARLIER of either the following two events: Either on the settlement day, or the day you first move into the place, IE take possession. For most people it would be settlement day. The question you need to ask yourself is; what are you paying your legal rep for if they can't provide you with this basic info?  Good luck with it all! 

    Profile photo of v8ghiav8ghia
    Member
    @v8ghia
    Join Date: 2005
    Post Count: 871

    HI,

    It has already been covered ….but yes – absolutely you need it.
    IF for example, the house burnt down 3 days before settlement, you still have to proceed with the purchase, whether the vendor had it insured still or not! It is considered extremely high risk not to – and some lenders have it as a condition before proceeding to settlement.
    Out of interest, Allianz (not recommending their product or not) have a 'sweetener' where they offer you free coverage up until settlement (max time limits apply) where the 12 mths of your policy does not commence until the day you settle, but they cover you up until that time…..effectively reducing your premium or giving you a free month or two.
    All the best with your new house too!

    Cheers

    Profile photo of wobblysquarewobblysquare
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    @wobblysquare
    Join Date: 2010
    Post Count: 95

    QLD – YES.
    Allianz as stated do free cover until settlement (If you purchase through Ray White, allianz may call you with this offer !!).

    Can anyone advise the purpose of a final inspection. Usually done within the last 24 hours prior to inspection? If i was to inspect a house that had burnt to the ground (r flooded) before settlement could i not say that it was substantially NOT the same as the house i agreed to buy!! Could i then on this basis (final inspection) be within my rights NOT to proceed with settlement, without penalty.?

    Profile photo of wblackwblack
    Member
    @wblack
    Join Date: 2010
    Post Count: 34

    Just for the records, Allianz won't insure in the town we have purchased in. Had to shop around. No problems with GIO.

    Profile photo of Jacqui MiddletonJacqui Middleton
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    @jacm
    Join Date: 2009
    Post Count: 2,539
    wobblysquare wrote:

    Can anyone advise the purpose of a final inspection. Usually done within the last 24 hours prior to inspection? If i was to inspect a house that had burnt to the ground (r flooded) before settlement could i not say that it was substantially NOT the same as the house i agreed to buy!! Could i then on this basis (final inspection) be within my rights NOT to proceed with settlement, without penalty.?

    Not 100% sure.  Your solicitor would know.  You might have to proceed to settlement, but insurance would cover the unfortunate fact that hte house had burned to the ground.  Pre settlement inspection is so you can for eg say "hey, the oven hotplates aren't working now." And you could tell your solicitor, and they could talk to the vendor solicitor who would insist it be fixed pre settlement, or they could agree to deduct a bit of money from the final sale price so you could fix it yourself.  A good idea to further "cover yourself" would be to take photos of the property pre-making-the-offer-to-purchase so you could compare to pics at pre-settlement.  If there was a fuss, you'd have photographic evidence.

    Weird stuff can happen at settlement and sometimes you just have to cop it on the chin (I settled on some flats on Monday and while the tenants have their keys, I was given none!  Vendor was too lazy or too busy surfing or too rude to come in and hand over the keys… so my poor PM has to knock on tenant doors, ask for their keys, and cut copies… at my expense.  Small issue, cop it on the chin, but illustrates the ridiculous stuff that can happen.  Not everyone has integrity in this world.)  .  But you don't want to cop expensive stuff on the chin, so chat to your solicitor to understand what things to check in the pre settlement inspection, and what they'd be able to to about it if you found something wrong.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of number 8number 8
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    @number-8
    Join Date: 2010
    Post Count: 333

    Final inspection is to ensure the house has not burnt to the ground or like- hence you would not complete. The Deposit would be taken out of the trust account and you would go look for another….. So many scare tactics out there in the insurance world….. I am happy to hold my money until settlement….

    http://www.birchcorp.com.au

    Profile photo of Bruce from BrisyBruce from Brisy
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    @bruce-from-brisy
    Join Date: 2010
    Post Count: 11

    If in QLD yes you require it same time as signing contract (you can get a cover note until sorted) best price I was quoted is by YOUI insurance – can't comment on rest of Oz.

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