In the majority of circumstances, yes, most lenders will require you to take out home insurance if you have a mortgage and buy a house.
In most cases, you'll need to make sure you have a policy in place before settlement occurs and you take ownership of the house. This is often because your lender will need the certificate of currency (proof of insurance) before you are responsible for the property. Some states, such as Queensland, require you to have cover when you and the seller sign contracts.
If you're buying a strata property, such as an apartment or townhouse, you don't need to take out building insurance – insurance should be included in your strata fees. Your conveyancer should be able to get proof of insurance for you.
You typically become responsible for the house from 5pm the next business day after the date you sign the contract – this is before settlement.
You are responsible for damage from the settlement date. However, lenders will usually make sure you have cover in place before the settlement date.
You are responsible for any loss or damage to the property when you exchange contracts so the lender will require you to have home insurance in place by the contract date.
You are responsible for damage from the settlement date. However, lenders may require you to have cover in place before the settlement date.
You become responsible for any damage to the property on the exchange of contracts so you need to have home insurance in place by the contract date.
You're responsible for loss or damage to the house when you sign the contract – this is before settlement – so you'll need to have home insurance in place by the contract date.
You become responsible for the house either when you're given possession of the property or the date the whole of the purchase price is paid – whichever date comes first.
You become responsible for the property either when you're given possession of it or the date you pay the whole of the purchase price – whichever date comes first.
| Response | Female | Male |
|---|---|---|
| Yes | 70.34% | 66.17% |
| No | 14.14% | 22.37% |
| I don't know | 15.52% | 11.47% |
All home insurance policies cover you for most major weather events such as bushfires and storms. However, a small handful don't automatically cover floods. If you are moving to an area with a history or flooding, you probably want this.
Figuring out how much to insure your home for is arguably the most important part of taking out home insurance.
Your sum insured is the amount your home would cost to rebuild if it was totally destroyed. You usually need to calculate this amount yourself – calculators can help. Make sure that your home is insured for the minimum amount required by your lender. You can usually find this in the loan offer document or by calling your mortgage broker.
Correctly calculating your sum insured is a pretty big onus to place on homeowners. For example, say you select a sum insured of $800,000 but it costs $1 million to rebuild your home – you would be $200,000 out of pocket. To prevent this, some insurers let you add a sum insured safeguard. This is a safety net that prevents big out-of-pocket expenses by providing up to an additional 30% of cover on top of your sum insured.
Just like buying a home, there's no one-size-fits-all for home insurance. While we can't say what's right for you, we can show you some policies we feel could be good depending on your situation. For more top picks, you can check out our best home insurance page.
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Total building replacement
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Accident prevention
Knowing the difference between fixtures and fittings can help you decide which home insurance policy is right for you.
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