Why do I need insurance as soon as I sign a contract to purchase a property?

February 2019

Under a standard contract in most Australian states, the property is at the risk of the buyer on the first business day after the contract date. This means that if the property is damaged between the contract date and settlement, the buyer cannot pull out and must proceed with the purchase of the damaged property with no price reduction.

 

If the property being purchased is in a community titles scheme with a body corporate in place, the buyer generally isn’t responsible for building insurance because the building itself is considered common property, therefore covered under the body corporate’s insurance. That being said, the building insurance does not cover internal fixtures such as floorboards and appliances.

 

As with all contract conditions, there are exceptions so if you are unsure about what kind of insurance you need, we recommend you speak to your solicitor or insurance broker.