What If the Property You’re Buying Is ‘Uninsurable’?

 
 

You’ve found the perfect property — but when you go to insure it, no one will cover it. Whether it’s flood-prone land, a bushfire risk zone, or a building with structural or compliance issues, an ‘uninsurable’ property can turn into a financial nightmare. Here’s what you need to know before you buy.

1. What Does ‘Uninsurable’ Mean? An uninsurable property is one that insurers either:

  • Flatly refuse to insure at all

  • Will only cover at extremely high premiums or with strict exclusions

This might apply to:

  • Homes in flood or bushfire-prone zones

  • Properties with significant structural defects

  • Buildings with non-compliant cladding or outdated wiring

  • Houses previously used for illegal activity (e.g. drug labs)

2. You May Be in Breach Without Insurance If you’re borrowing to buy the property, your lender will require insurance from settlement day. If you can’t get a policy in place:

  • The bank may not release funds

  • You may breach the contract and lose your deposit

  • You may be liable for damages if settlement fails

Always confirm you can insure the property before making your offer unconditional.

3. Insurance Disclosure Should Be in the Contract Vendors in Victoria must disclose material facts. If they know the property is difficult or impossible to insure, and don’t tell you, it could be grounds to challenge the sale — but only in limited cases.

We’ll review:

  • Section 32 Vendor Statement for known issues

  • Whether flood/fire overlays or building reports raise red flags

  • If disclosure obligations under consumer law have been breached

4. Don’t Rely on the Agent’s Assurances Real estate agents often don’t know the true insurance status — or assume it’s “probably fine.” You must:

  • Make your own enquiries

  • Contact multiple insurers

  • Confirm quotes and coverage before going unconditional

5. Ask for a Building Report Before You Sign If the property is older, renovated, or shows signs of movement or damage:

  • Obtain a building inspection

  • Ask if the report raises issues affecting insurance eligibility

  • Consider adding a clause making your purchase conditional on obtaining insurance

We can insert special conditions to protect your position.

6. Flood, Bushfire and Environmental Zones If the property sits in a:

  • Flood Overlay Zone

  • Bushfire Management Overlay (BMO)

  • Or contaminated land register

You may be unable to obtain standard cover — or the excess/premiums may be enormous. We always check the planning certificate and overlays.

How We Help At Victorian Property Settlements, we:

  • Flag high-risk properties early

  • Review contracts for disclosure and zoning issues

  • Recommend building and insurance clauses where appropriate

  • Liaise with your broker or insurer to confirm cover before exchange

Click here to request a contract review if you’re concerned about insurability.

**Victorian Property Settlements – Trusted for over 25 years by Victorian buyers and sellers. Visit: **www.victorianpropertysettlements.com.au