If you’re wondering who’s liable for claims related to a property during the settlement process, well done. You’re a thinker. Not many people think about it, which is a bit of a worry. There’s no such thing as “Settlement Insurance ” per se. But making sure you’re covered during the settlement process is extremely important, whether you’re the purchaser or vendor.
First up, it’s worth noting that most purchasers don’t consider insurance necessary on a vacant block of land. The Lender doesn’t require it, and many purchasers see it as minimal risk. If however, someone goes on the land and hurts themselves, public indemnity insurance could save you a lot of money and grief.
If there’s a building or structure on the land though, the Lender will require a copy of the insurance policy noting the property address. The policy will also need to note the lender as having an interest in the property. Without this, settlement won’t occur.
As soon as all parties have signed the sale contract, the purchaser becomes responsible for any claims relating to the property, unless noted otherwise in the contract. So it’s best to arrange your insurance as soon as you sign the contract.
In some instances, there can be exceptions to this. If a claim is made and it can be proven that the vendor was at fault, then they become liable for the claim. So as a vendor it’s best not to cancel any policy you have on the property until the sale is finalised.
You’ll need to check (and double-check) with the Body Corporate, but they may already have the necessary insurance in place. It won’t cover your contents though, so you need to keep that in mind. Floorings and window treatments may not be covered either. You’ll want to be covered for these items in case of flood or other occurrences.
Each state in Australia words the contract clauses differently, but there’s some good information here that keeps it clear.
There’s some valuable information around household insurance here too.