Many people do not realise that they
need to get insurance on their new property before settlement
occurs. It is the sort of risk that is difficult to fully
appreciate but is capable of sending you broke or bankrupt.
If your new home burns down before settlement, then without
insurance you may end up purchasing a property at top dollar that
is only a pile of rubble and ash. Your bank or lender may also
revoke finance approval, putting you in breach of the sale
The risk of damage to a house becomes the purchaser's
responsibility as soon as the contract is signed and before any
cooling off period expires. Depending on the wording of the
contract, the vendor (seller) is usually not required to repair
damage or replace property unless the vendor has acted
You also can't rely on the vendor's own insurance (if any) as
that will not be paid to you.
You shouldn't wait until the cooling off period expires to get
insurance. Many people do this, on the basis that they might be
able to use their cooling off rights to walk away from the contract
if something happens during that short period.
But that assumes that the vendor or the agent will inform you if
the house burns down, a car crashes through the front room or the
pipes are stolen.
Insurance will not cover you for anything that happens before
the policy comes into effect, which means that if there is
something which has happened to the property that you are not told
about before you get insurance or make your decision about whether
to cool off, then you will be unprotected.
There may also be an overnight gap period between the end of the
cooling off period and getting your insurance where you are still
at risk. It is therefore highly recommended that all purchasers
obtain insurance before or immediately upon signing the
So you see it's important to sort out your home insurance.
Need some more information on this issue? Get in touch with
today's blog writer Travis Le Riche, Associate in the Andersons Commercial team.
Please note, this Blog is posted in Adelaide, South
Australia. It relates to South Australian legislation.