Why the need for house insurance after signing a contract for a purchaser? | Garth Brown

When you buy a property the Contract stipulates at Settlement the Vendor must deliver the home in its condition as at the date of when Contracts were signed and dated and the Deposit was paid.

And the Vendor (the seller) is required under the Contract to carry House Insurance until settlement, e.g. specifically in case of Fire.


But what if the House burns down between signing the Contract and Completion – and the House Insurance coverage does not cover the rebuilding work or there is no insurance what so ever to buy another property?


To cover this possible problem, Brown & Brown Conveyancers always state to take out House insurance at the time of Signing for Purchasers. House

A Purchaser cannot simply rely upon the Vendor to have insurance or even enough insurance coverage.

With House Insurance companies – some will insure the property even though your name is yet to be registered on the Title (legal interest) for Purchasers – there are insurance companies that will not insure just because you as a Purchaser have signed the Contract and there exists an equitable or insurable interest.


We encourage Purchasers to really make sure the Insurance Company will cover you from the date of signing the Contract; the law at the moment is a grey area – it’s best to have more insurance than less.

There have been cases where homes have burned down and there was no insurance (example in the Victorian bush fires) and the Vendor will not negotiate or complete the Sale – it’s wise to have some back up as a Purchaser if you’re serious about your purchase.


For Vendors who are not selling – please make sure the House is insured and for the right amount ASAP. Over 40% of Victorian Bushfire victims had NO insurance or insufficient insurance coverage.


Remember…the Strata Manager pays for Building insurance through the Levies and they arrange for a Registered Valuer to value the Building, generally every two years, to ensure the Insurance coverage is adequate.


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Garth Brown


Garth Brown is the Founder and Director of Brown and Brown Conveyancers one of Sydney’s leading Conveyancing Firms. With 20 years experience as a practicing Conveyancer he has assisted hundreds of Clients to navigate through the maze of conveyancing issues when buying and selling property. Visit www.conveyancers.net.au/

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