Lapsed home insurance no help when vendor’s house burned down

 In Conveyancer, First Home Buyer

Owning a home costs more than just the purchase price. With stamp duty, council rates, and utility costs, it seems like the bills will never stop.  

But there’s one bill you won’t want to miss paying and that’s home insurance. If disaster strikes, imagine bearing the entire costs involved for the clean up! 

Like many aspects of owning a house, navigating Home Insurance can be a minefield. We’re here to put it all into a context so you can protect your biggest investment.

Why do I need Home Insurance?

If you own your home outright, technically, you aren’t required to have Home Insurance. 

But if you have a mortgage on the property, your lender will require proof of insurance before they approve the loan. In the eyes of the bank, you’re more likely to default on your repayments if something happens to your house and you don’t have Home Insurance coverage. The extra costs involved for repairs after a kitchen fire or a flooded garage soon add up!

What happens if I don’t have Home Insurance?

Here’s a real-life scenario that shows just how critical Home Insurance is.  

One of our clients decided to sell their house. Contracts were exchanged and the parties involved were about to seal the deal when a fire tore through and destroyed the home. 

Life was busy and the vendors hadn’t renewed their Home Insurance, and the buyers hadn’t sorted theirs out yet. The purchase agreement was withdrawn. The vendors were left with an unliveable house and a demolishment fee, while the buyers returned to searching the property market.

If this client had Home Insurance, the damages would have been covered under their insurance. If the buyers had their insurance in place, they could’ve had a say in how the home was rebuilt. 

Three things to consider when choosing Home Insurance

1. Annual renewal & updates

When renewing your insurance, think back over the past year. Have you made any renovations that could change the value of your property, or have you changed banks? 

Notify your insurance provider with these changes, and while you’re having a detailed look at your policy, check to see if the excess amount is within your budget.Your policy must be as up to date as possible or it can make a difference if you need to make a claim.

2. Research your policy 

What does your insurance policy include and exclude? For example, if you live in a flood prone area, double and triple check that you’re covered for flood damage

3. The strata loophole

If you’ve purchased a strata property, the body corporate has the external parts of the building covered. If the bath overflows and ruins the carpet or there’s a hole in the wall, that comes under your Contents Insurance, which covers all internal issues.

It makes sense to invest in the future protection of your biggest investment. Seeking expert advice will save you time, money and heartache.

Give us a call on 4910 0522 or we have more info on our website here.

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