Insurance Neccessary??

[Rooster]

H i Guys,

Have just settled on a house in Vic. The house itself is unlivable and has been purchased with future development in mind.

I haven't bothered to insure it as i really don't care if it falls down. However today it occured to me that maybe if somebody got injured on the block or possibly a tree from my yard fell into the neighbours, i could be liable?

Is what i'm thinking correct and will standard house insurance cover me for an instance like mentioned?

Cheers

Rooster

 

[letiha]

Correct.

Speak to your insurer and just explain that you just want public liability insurance.

 

[The Y-man]

Is it financed and did the lenders want it insured? I suspect at minimum you need some form of public liability cover - how do people who buy a vacant block of land do this now that I come to think of it....



Cheers,

The Y-man

 

[Rooster]

Hi,

Yes, the property is financed and i'm sure the Bank requires some form of insurance, its just working out what is suitable and gives the best protection.

Cheers

Rooster

 

[Raddles]

Hi there
just in relation to your comments Y Man
We had a block of land which was a result of the Canberra bushfires - it was a mess.
We had to wait to have the block demolished - but did have public liability insurance on the block pending that.
The insurance was linked to another property we had with the same insurer.
It was important to have because there was a swimming pool on the property - without proper fencing - and there was a least a 3 month lead time before the property was cleared.
thanks

 

[boods99]

Is it financed and did the lenders want it insured? I suspect at minimum you need some form of public liability cover - how do people who buy a vacant block of land do this now that I come to think of it....



Cheers,

The Y-man

I have bought numerous blocks of land and have never insured any of them. Insurance company told me you can't insure land.
As far as public liability goes...I think you only have to get this is you bought the land as part of a business venture ie use it for the purpose of carrying out a business? Or if there is a chance there is going to be public use of the land, ie a park etc.
Always happy to be corrected

The banks dont require insurance on vancant land. (in WA at least)

 

[Perp]

I have bought numerous blocks of land and have never insured any of them.

You do like to live dangerously!

Insurance company told me you can't insure land.
As far as public liability goes...I think you only have to get this is you bought the land as part of a business venture ie use it for the purpose of carrying out a business? Or if there is a chance there is going to be public use of the land, ie a park etc.

A standard home insurance policy is inappropriate. But you can get public liability insurance to cover potential liability arising out of your ownership of the land, and yes, it is necessary. For example, what if somebody using your land as a shortcut trips and injures themselves? It wouldn't cost very much and unless you own absolutely nothing within the same structure (as the one that owns the land), I think you'd be mad not to have it.

letiha works in this field; take her word for it if you don't take mine.

As an added 2c worth, I always use an insurance broker. As with mortgages, my reasons have very little to do with the price of the policy. There are no "one size fits all" insurance policies out there; they vary enormously. Having the wrong type of insurance, or not enough coverage, could be financially devastating.

An example of the perils of under-insurance: let's say that your home would cost $400K to re-build, and you insure it for $200K because you've lost track of construction costs. You have a fire that burns down half the house, costing $200K to repair. How much do you think you'll get from the insurance company towards the $200K repairs? Not $200K. Probably $100K ("you insured half the house, so we're covering half the damage"), but in years past (not sure if it's still the case), the insurer could avoid paying out anything ("we were insuring the half of the house that wasn't burnt").

Do not under-insure, and don't choose policies on price alone.

 

[boods99]

You do like to live dangerously!

...what can I say...I love extreme sports and drink Pepsi Max!!

Seriously though, I have never bothered but now you put it that way I may enquire with an insurance broker and get the low down...

 

[boods99]

After thinking about it for a while...

For example, what if somebody using your land as a shortcut trips and injures themselves? It wouldn't cost very much and unless you own absolutely nothing within the same structure (as the one that owns the land), I think you'd be mad not to have it.

..In that case they would be tresspasing on private property.

What happens if someone trips and falls in the front garden of your PPOR? I'm almost certain nobody would have taken out a public liability policy on their own house??

Boods

 

[Perp]

Glad you asked, boods!

Actually, standard home insurance policies do include a public liability component for exactly this sort of situation.

And as ridiculous as it may seem, trespassers are able to sue you! Case law is littered with examples... The Civil Law Act 2002 has somewhat tidied things up - eg those engaging in criminal activities such as burglary would now be prevented from claiming - but I believe you'd still be at risk under this scenario, which is a true example of a small-time property developer from the Sunshine Coast (I may not have the exact numbers/ages etc correct):

Developer buys a block of land with gorgeous views to build stunning home on. It's partially complete and one of the tradies' apprentices thinks "man that's a stunning house", and on the weekend takes his girlfriend to show her. The girlfriend's son, a toddler, is with them, trips on ?something and is - tragically - seriously injured. (From memory he may have hit his head when he fell; in any case, he got serious head injuries and was left almost completely permanently incapacitated.) Mother sues the developer, who is found liable.and has a judgement against him for about $8M (I think), despite not having invited them to use the land, and loses his not-insignificant portfolio (he also wasn't using structures ).

Dymphna Boholt collects these stories, as she's written a book on asset protection. She backs up all her anecdotes with newspaper articles, case quotes, etc - we're not talking urban legends here.

And as she points out, even if they'd ultimately be unsuccessful, lose on appeal, etc, do you really want the stress of finding out? Have the right structures to deter them from suing you in the first place, and have insurance if they decide to have a go. The insurers will probably settle if there's a prospect of success, and you'll be saved most of the trauma.

 

[boods99]

Tracey,

You have propmted me to re-read my own insurace policy on my PPOR, and it has become evident that you are, in fact, very correct.

It goes to show that you really do learn something new every day!

Thanks for the advice!

Boods

 

[Perp]

Glad to have at least partly reciprocated for your excellent advice re timber flooring, boods!

 

[steveadl]

Rooster, I have an house which wouldn't bother me if it fell over tomorrow as I want to build on the land one day. I do however still have insurance on it.

You need to have public liability as people above have mentioned. Also, if you insure the building for say $100-200k - then if the unforseen does happen and it burns down, you receive an insurance pay out to help you with the constuction of the new building.

I have building policies out on all my development houses/blocks, and though the payouts wouldn't cover my development construction plans - at the very least, they would replace the house that was standing there.

Similar thing happened to friends of mine. Water damage went under the building (somehow) and ruined the floorboards through half the house. They had the option with the insurance co. of having the floor replaced, or taking the cash equivilant and using that towards the new houses they are now going to build on the block. Since it was an old house they planned to knock over anyway, they're taking the cash and knocking it down.