Buying a Property in Victoria? Here’s When to Insure It — and Why It Matters
/One of the most misunderstood aspects of buying property in Victoria is when you should take out insurance. Many purchasers assume they’re not responsible until they settle and get the keys.
That assumption could prove expensive.
🧾 Legal Risk vs Financial Exposure
In Victoria, legal risk remains with the vendor until settlement, unless there’s a special condition in the contract that passes risk earlier.
This means that if the property is damaged or destroyed before settlement, the vendor is usually the one legally responsible for restoring it or addressing the issue — unless:
The purchaser has already taken possession;
The purchaser has negotiated early risk transfer in writing;
Or there’s a default or breach changing those rights.
But here’s the catch:
Even if the legal risk is technically with the vendor, the financial exposure sits heavily with the purchaser.
🏦 You Have an Equitable Interest – and That Needs Protection
Once you sign the contract, you hold what’s called an equitable interest in the property. That means:
You’re financially committed to settle
You may have paid a 10% deposit
You may have organised finance and incurred costs (valuation, pest inspections, etc.)
And you may still be forced to proceed with the purchase, even if the property is damaged — depending on the extent and cause
A vendor’s insurance may not cover every risk. And in a serious event, you don’t want to be stuck relying on their insurer, who may deny the claim or delay resolution.
🛡 Our Advice: Insure the Property from the Day of Sale
At Victorian Property Settlements, we always recommend that purchasers take out a building insurance policy starting the day the contract is signed — not at settlement.
It’s a small premium for a big peace of mind.
Even though legal responsibility sits with the vendor until settlement, you’re the one with the most to lose if something goes wrong. You want to control the insurance process, claims, and reinstatement — not rely on the vendor or their insurer.
🧾 Do Lenders Require Insurance?
Yes — almost all lenders will require you to:
Provide a Certificate of Currency confirming that insurance is in place
Show that the property is insured for at least the replacement cost
Have the lender noted as an interested party on the policy
If you leave this too late, you may delay settlement and risk default penalties.
📦 Special Cases: Strata, Units & Apartments
If you're buying a strata property (such as a unit or apartment), the building insurance is usually covered by the owners corporation — but:
You should verify this via the owners corp certificate
You may still need contents insurance and landlord insurance
Public liability is also worth considering, especially if the property is tenanted or vacant
📌 Summary: What You Should Do
✅ Take out insurance from the date of contract
📅 Ensure the policy starts immediately, not just from settlement
🧾 Get a certificate of currency for your lender if needed
💬 Speak to your insurer about appropriate cover — especially for unoccupied or under-renovation dwellings
Need Help Understanding the Timing?
We’ve helped thousands of Victorian buyers protect themselves with smart contract terms and practical advice.
At Victorian Property Settlements, we don’t just settle the property — we make sure you’re protected the whole way through.
📞 Call us on 03 9783 0111 or visit:
👉 www.victorianpropertysettlements.com.au