Buying property in NSW is an exciting step, but it also comes with responsibilities that many first-time buyers overlook. One of the most important is property insurance. In NSW, it might seem early to think about insurance before you even move in, but timing matters. Let’s unpack property insurance in NSW and help you understand when to arrange cover so your new home stays protected from the moment it should be.

When Does the Risk Pass to the Purchaser?

In NSW, the risk for damage to a property passes to the purchaser on the earlier of taking possession or settlement. That means if you move in before settlement and something happens to the property, such as a fire, flood, or storm damage, the loss could be yours to bear.

To avoid unexpected costs, it is strongly advised to arrange property insurance in NSW from the settlement date or earlier if you will be taking possession beforehand. Even though the seller continues to own the property until settlement, protecting your soon-to-be home ensures you are not left exposed should anything go wrong in the interim.

Your Insurance Obligations by Property Type

Building Insurance for Houses

If you are purchasing a standalone house, you are responsible for insuring the property from the day you become the owner or earlier if you move in before settlement.This applies regardless of whether the home is newly built, pre-owned, or under renovation.

For buyers obtaining finance, most lenders will require evidence of building insurance before releasing funds for settlement. The policy must usually list the lender as an interested party, confirming their security over the property.

If you are purchasing without a loan, there is no legal obligation to arrange insurance, but it remains a wise safeguard. A single event, such as a storm or a burst pipe, can cause damage worth far more than the cost of the premium.

Insurance for Strata and Company Title Properties

The insurance requirements differ when purchasing a strata or company title property.

In strata title developments, you do not need to obtain your own building insurance. The building is insured collectively by the Owners’ Corporation. Individual owners contribute through their strata levies, which cover the cost of building insurance and other shared expenses. As part of the conveyancing in Sydney, your conveyancer can obtain the Certificate of Currency confirming that the policy is current and adequate for your lender’s needs.

For company title properties, the building is typically insured by the company that owns it. However, because the arrangements can vary between companies, your conveyancer in Sydney will confirm this during the contract review. If the company does not maintain building insurance or if cover is insufficient, you may need to arrange supplementary protection.

Lender Requirements and Cash Purchases

When purchasing with a loan, lenders almost always require proof of building insurance before property settlement in Sydney. This protects their financial interest in the property should damage occur before the mortgage is finalised. Your conveyancer will assist in providing the necessary documentation, including the Certificate of Currency or details of your individual policy.

For cash buyers, there is no such legal or lender requirement when buying property in NSW. However, taking out insurance remains highly recommended. Without it, you bear the full cost of any accidental damage, natural disaster, or liability claim that occurs before or after settlement.

Other Recommended Insurances

Beyond building insurance, there are several other policies worth considering depending on how you intend to use the property.

·      Contents insurance protects personal belongings from theft, fire, and damage, and it often includes public liability cover.

·      Landlord insurance is ideal for investment properties, covering loss of rent, tenant damage, or liability claims.

·      Mortgage protection insurance provides peace of mind by covering repayments in the event of illness or job loss.

An insurance broker can help you identify the most suitable cover for your circumstances and ensure no gaps in protection.

Talk to Trusted Sydney Conveyancing Experts

Whether you are buying your first apartment or your next family home, it pays to understand when you should arrange insurance for your investment. Professional conveyancing in Sydney can help ensure that every legal and financial detail of your purchase is properly managed, from reviewing the contract to confirming settlement conditions. It also helps you understand when ownership and risk pass to you, so you can arrange the right insurance at the right time to protect your investment.

The Sydney conveyancing experts at Paul Denny Conveyancing can guide you through each step of the purchase process, from contract review to settlement, and help you understand your insurance responsibilities along the way. Contact us to discuss your property purchase and ensure your new home is covered from the moment it should be.

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