Insurance cover notes

[GreenGoblin]

Hi all

We're finally getting into the IP market, having recently purchased a house and gone unconditional following due diligence. With 8 weeks left until settlement, I've been told I should get a cover note for the building (even though I have a clause that the building is at the owner's risk until settlement, and the owners will continue living in it until then). I'll take out landlord's insurance once we settle, but how do I go about getting a cover note for the building until then (or do I just need to take out and pay for building insurance for the 8 weeks)?

Thanks in advance,
The Green Goblin

 

[The Y-man]

Just give your insurance company a call. You just take out building insurance as normal (ie 12 months) starting today. They will then send you a cover note, with payment due in a month (or whatever).

You'll probably find your banks require to see the cover note before final loan approval, as the place may burn down pre-settlement (while the current owner's may be responsible, there is a small possibility that they may not be covered, and they may not make good repairs, and still enforce settlement).....


Cheers,

The Y-man

 

[Vodka]

Ring an insurance company and ask for an insurance cover note, needs only to be for the cost of replacement of the home should something happen to it before settlement. The cover note is usually valid for thirty days before payment is required.
Check to see whether the landlord insurance will cover the replacement of the home if a fire or burglary was to occur?? I could be wrong but i think landlord insurance will cover rent defaults, accidentally damage to a $ value, public liablility, tenants thieving ovens... but not a fire. You may need to take out a home insurance for the house plus the landlord insurance.

Good luck with the new IP

 

[kathryn d]

Just give your insurance company a call. You just take out building insurance as normal (ie 12 months) starting today. They will then send you a cover note, with payment due in a month (or whatever).

You'll probably find your banks require to see the cover note before final loan approval, as the place may burn down pre-settlement (while the current owner's may be responsible, there is a small possibility that they may not be covered, and they may not make good repairs, and still enforce settlement).....


Cheers,

The Y-man

I know this must be customary for you Aussies but it sounds so weird to me. Here, we must have insurance to start at least the day we take ownership of the property. If it burned down, or whatever, we could just say NO, as the property was not in the condition as agreed.

 

[Alanna]

Congratulations on your purchase.

Yes, definitely get a cover note from your insurance company. You should be able to have building cover for 12 months and have landlord insurance commencing at a later date.
Bear in mind that ownership of the property commences from date of Offer and Acceptance and that if, for example, you wished to gain early possession for painting or new carpets etc, you would want to be insured.

Regards

 

[tubs]

I agree that it is stupid, and I feel that it is unnecessary, however everyone says to do it, so we all do.

Anyone actualyl know of any cases where a property has been damaged/destroyed between contract and settlement, and what happened?

 

[NOT 2 L8]

I agree that it is stupid, and I feel that it is unnecessary, however everyone says to do it, so we all do.

Anyone actualyl know of any cases where a property has been damaged/destroyed between contract and settlement, and what happened?

Yes, a hotel in Kalgoorlie burnt down during the settlement period. The new owner assumed that the current insurance would cover him. It did not!!!

Cheers Chrisv

Ps. This was in the early 80's so its been around for a long time.

 

[Vodka]

I agree that it is stupid, and I feel that it is unnecessary, however everyone says to do it, so we all do.

Anyone actualyl know of any cases where a property has been damaged/destroyed between contract and settlement, and what happened?

Yes, during a pre-settlement inspection it was noticed that the tenants stole doors and the stove from the property, the house only had already been on-sold and was due to be removed after settlement so that a unit block could be developed, the former owners renegotiated the contract price (couple of hundred dollars off) and the property settled on time. No need to claim insurance.

 

[GreenGoblin]

Thanks everyone for your advise (and good wishes). Made sense when I spoke to the insurance company - I've taken out building insurance and will cancel the policy and take out landlord insurance on settlement and getting a tenant. The insurer's advised that there's no cancellation fee for converting the building policy into a landlord's policy, so all's sorted (for now)

Regards,
The Green Goblin

 

[Crystalleez]

Hey GreenGoblin.

You said and your last post that you will convert the building incurance into land-lords insurance once your able. Wouldn't you need land lords insurance + the building insurance though? (is home insurance the same as building?) I thought they covered different things.

I could be totally off base....

 

[stgeorge5_8]

Think in the conditions and clauses section of contracts here in qld states it is the new owners responsibilty to insure once a contract has gone unconditional. am i correct ?

 

[ritchie77]

Bldg to landlord insurance

Hey Green Goblin or any others that can help...

I see you said you took out building insurance and you can change this to landlord insurance upon settlement and finding a tennant...

Could you provide me with the insurance Company you used and rough estimation of prices?? I am currently awaiting quotes from SGB (my lender).

Cheers
Ritchie77