Buying a house: Do you need home insurance before settlement?


When you’re buying a new home, sorting out insurance might be the last thing on your mind. We don’t blame you, there’s a lot to think about! It’s vital to know what the requirements are though. 

What is the settlement process?

When you purchase a property in Australia, the settlement process is the period between exchange of contracts and settlement. It’s when the final details are sorted out and the sale is completed. In most cases, the settlement period is around six weeks.

During this time, the buyer has an opportunity to arrange finance, organise insurance and perhaps even request necessary repairs or improvements to the property. The settlement period can be a stressful time for buyers, but as long as you are prepared and have everything organised in advance, there’s no reason  it can’t go smoothly.

Getting insurance before during or after settlement

The laws and regulations governing when a buyer becomes liable for home insurance vary between states and territories. In some cases, you may be required by law to have home insurance before settlement date. Settlement date is when you take possession of the property.

In other cases, it might be okay to wait until the date of settlement to purchase your policy. 

New South Wales and Victoria

The buyer becomes responsible for addressing any damage to the property from the settlement date. That means, technically, the vendor is responsible up until this point, and would need to have an insurance policy effective until that date. Despite that, it might be best to have your insurance in place from the time the contract of sale is signed.


After both parties have signed a contract of sale, the purchaser becomes responsible for the property from 5pm on the next business day, and would need to have a home insurance policy in place from then to cover any damage.

ACT, South Australia and Tasmania

The responsibility for any damage during the settlement period usually rests with the buyer. If you’re the buyer, you’ll need to have your insurance sorted before exchanging contracts. Otherwise, you may have to pay for any damage sustained to the property — such as damage from a weather event like a storm.

Western Australia and the Northern Territory

The buyer assumes responsibility for the property at one of two times (whichever comes first):

  • on the date the buyer is entitled to or given possession, or
  • on the date that the full purchase price is paid.

How does your new home location affect your premiums?

Your insurance premiums may be affected by the location of your new home. If you’re moving to an area less prone to bushfires, floods or storms, there is a chance your premiums - and excesses - could be lower than they’d be in a more high-risk area.

If you’re set to pay a higher premium, you may be able to offset some of the cost by choosing a higher excess. Watch out for other hidden costs when buying a home.

What about strata insurance for units and apartments?

When you purchase a unit in a strata scheme, your body corporate will usually have an insurance policy that covers the building and common areas. However, this doesn’t cover your personal belongings or any renovations you might do to your unit. You’ll need to take out your own Contents Insurance policy to cover these things. 

Better to be safe than sorry! Choose the right cover

No matter what state you live in, it’s important to factor in home insurance when buying a home. Protecting your biggest investment should be a top priority, and with the help of AAMI, it can be easy and affordable too.


Get a quote for AAMI Home & Contents Insurance 

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Insurance is issued by AAI Limited ABN 48 005 297 807 AFSL 230859 trading as AAMI. Any advice has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. Please read the relevant Product Disclosure Statement before you make any decision regarding this product. The Target Market Determination is also available.