IP insurance - when should it starts?

[MFG]

Hi,

again, new to IP. will be settling one in May. Have signed the contract. The letter from the convenacyer said that i should insure the property once i sign the contract - say in case of fire etc.

My question, is that true? when should i start buying the insurance? even before settlement where the current owner still reside the property?

cheers.

 

[jrc77]

Scott,

I just bought a new PPOR and orgaanised building insurance as soon as the contract was unconditional. I signed up for a month by month payment and it cost approx $50 to insure the place for the "settlement month" - I think it's a small price to pay for the piece of mind.

Regards,

Jason

 

[dan c]

We always get our insurance to start as soon as cooling off period finishes. It doesn't cost too much for building insurance for a month or 45 days, and like Jason says, it gives you piece of mind just in case anything happens.

 

[MFG]

thanks. i just went into the bank and sign up one straight away. cheers.

 

[bene313]

You need a cover note for insurance during the settlement period. Speak to your local insurance broker or direct insurer.

 

[alplant]

This is something that's always intriqued me. It feels like double dipping by insurance companies. We've bought and sold a number of houses over the years and never dared to cancell the insurance on the one we were selling until settlement but always purchased insurance on the new one from signing the contract, as recommended. If the people who were purchasing the properties we were selling did the same thing those properties had two lots of insurance on them for the period between signing the contract and settlement. It's not much, but it seems to be common, so multiply it by the number of houses sold every year and it it would add up to a lot of money. I'd love to know why this is a requirement, after all we don't actually own the property until settlement so why are we resonsible for the insurance.

Has it ever been tested I wonder. Does anyone have any knowledge of insurance needing to be claimed in that period and whose insurance had to pay up? I would love to know the reasons for this, if there are any.

...........

PS ... I did a search of these forums and found this really interesting thread about this very thing. It seems that it is a really grey area.
http://www.somersoft.com/forums/showthread.php?t=47904&highlight=insurance

 

[bene313]

If I'm the buyer, it's about mitigating the risks. I'm not interested in insurers double dipping - I'm interested in protecting the asset I have an interest in.

 

[The Y-man]

thanks. i just went into the bank and sign up one straight away. cheers.

That's interesting...

The Y-man

 

[alplant]

If I'm the buyer, it's about mitigating the risks. I'm not interested in insurers double dipping - I'm interested in protecting the asset I have an interest in.

bene313 that thread I posted a link to is a very long one but it's extremely interesting. A quick breakdown ... The OP was in the process of buying a property and it caught fire (before settlement), his insurance company said they wouldn't pay out because he didn't have a financial interest in the property before settlement. The vendor also had insurance but her insurance wouldn't pay either because she hadn't let them know that the place was empty. There is a lot more in there but that's the basic facts. Not much protection there. He did get his deposit back.

 

[Savanna100]

Insurers dont double dip, if you have an item insured with two different insurers and a claim needs to be made, the payout is spread across the two insurers (probably half each). ... at least thats what learned doing law.

 

[Fudge]

This is something that's always intriqued me. It feels like double dipping by insurance companies. We've bought and sold a number of houses over the years and never dared to cancell the insurance on the one we were selling until settlement but always purchased insurance on the new one from signing the contract, as recommended. If the people who were purchasing the properties we were selling did the same thing those properties had two lots of insurance on them for the period between signing the contract and settlement. It's not much, but it seems to be common, so multiply it by the number of houses sold every year and it it would add up to a lot of money. I'd love to know why this is a requirement, after all we don't actually own the property until settlement so why are we resonsible for the insurance.

Has it ever been tested I wonder. Does anyone have any knowledge of insurance needing to be claimed in that period and whose insurance had to pay up? I would love to know the reasons for this, if there are any.

Yes it has been tested.

I mentioned it on a post regarding insurance a while back. Refer to the extract from an API article last year.

I have followed this up with my solicitor when I purchased last year, and she mentioned that the states all have different laws.

In Qld, she advised me that I take out insurance on the day of the contract signing, as I have a vested interst in the property.

Cheers,

F

 

[RedCat]

I was also directed in QLD to purchase insurance within 24 hours

 

[lura]

This is a bit of a grey area.

It is recommended you take our insurance from the date you sign the contract. However, you can make it a special condition of the contract that the insurance is in place and then cross off the Clause in the terms and conditions on the contact - effectively putting the onus of insurance on the vendors until settlement date.

I have never encountered an issue relating to claims of insurance through contract period (touch wood) but at the end of the day, as a buyer - you need to make your own assessment and be at ease with your decision. Only about 25% of buyers have taken this option.

 

[alplant]

Insurers dont double dip, if you have an item insured with two different insurers and a claim needs to be made, the payout is spread across the two insurers (probably half each). ... at least thats what learned doing law.

It's a double dip of sorts if both parties happen to have the same insurer. The insurer gets two premium payments for the month, or however long it takes. In some cases settlement is delayed. But they only have to pay out once (if they have to pay out at all). Mostly there wouldn't even be a claim, so two premiums for the same month on the same property, just paid by two different people.