Three Insurances You Need To Consider When Buying Property

The journey of owning property can be so rewarding, but the process can often turn over its fair share of challenges whether you invest in property or occupy it. You will never know everything that has to do with how your property was built, what changes have been made over its lifetime or what is secretly deteriorating behind the walls. That’s why it’s best to know what insurance is available, what it covers and if having the right insurance can put your mind at ease.

House Insurance

House or home insurance covers financial losses regarding any damage or loss in a property that you own. This includes the main dwelling but should also cover the garage or any other secure space that you own.

Home insurance is the first thing to consider and lenders will usually make it a requirement for you to have some sort of home insurance. There are different levels of home insurance that may cover things such as rebuilding and repair costs, temporary accommodation and disaster coverage.

Look to research the area where the property is located and find the likely risks that you should look to cover, whether your area is more prevalent to bushfires, flooding or is even in an area with a higher crime rate, it’s important to be realistic and plan for the worst.

Money saving experts from Australian website ‘Mozo’ judged NRMA as the best quality home insurance, but there are varying options on the market specialising on different areas.

Although most people will get home insurance once they’ve moved in to their new home, they should really get home insurance once their offer is accepted and have it valid throughout the settlement period.

The seller may well have insurance on the property, but you don’t know when they may remove it, which may be suddenly and then the place isn’t covered. If a flood, fire or tree falls down on the property that your bought, if the seller doesn’t have insurance, then your insurance will kick in to ensure that you can get the repairs down to the property so you can move in at settlement time.

It’s not that expensive to cover the few months of settlement, but it’s worth all it’s weight in gold if something goes wrong.  

Title Insurance

Title insurance protects lenders and homebuyers from losses suffered from unknown defects in a property title, that may have occurred prior to the purchase of the property.

For instance, the previous owner might have built a deck in the backyard without getting a council permit, so if the local council told you to remove it, Title Insurance is there to cover any legal costs, removal costs and rebuilding costs that may occur.

It can covers anything from incorrect boundary lines to discrepancies over adverse possession or any illegal building works (decks, garages, sheds, attics, balconies, etc). The catch is, the owner who takes out the Title Insurance must not know at the time of purchase that these issues did not exist.

There have even been cases where people have built separate dwellings on blocks, sold the property and council have come calling to the new owners who had no idea about the previous building work not being regulated, this is where Title Insurance can really save the day.

Property law expert and licensed conveyancer Kiani Mills believes Title Insurance ‘helps just as much on the out-going side as it does on the in-coming side’.

For instance, after a client had sold a property, the bank came calling suggesting that he didn’t have financial approval to sell the property because there were discrepancies between neighbouring properties. The Title Insurance policy was activated to rectify the issue and help settle the property.

Unlike other insurance policies, Title Insurance is a one-off policy that lasts from the day you are the registered owner of the property (i.e. the day you settle the property) until the day your name is off the title. The one-off payments usually range between $400-$1000 which is a great investment as it covers you for the entirety of your ownership of the property.

Rental Income Protection Insurance

Rental Income Protection Insurance, often known as Landlord Insurance provides rental providers with financial protection should things go wrong with tenants at the property or their property is not in a liveable state to have tenants occupy the property.

If tenants stop paying rent or leave without giving any notice, Rental Income Protection Insurance will cover the losses, usually up to an agreed amount (often around $5,000). Also, the insurance provider will cover losses from incidents such as fires, earthquake, building repairs, theft, vandalism and flooding.

Again, make sure you analyse the potential damages to your property based on its location, build quality and history. Damage caused or any issues arising from animals are usually not covered by the insurance company.

Having Rental Income Protection Insurance will also help maintain a consistent income from your rental properties, so you won’t have any cash flow issues while you need to repair ore re-let your property.

At the end of the day, it all comes down to peace of mind, covering yourself with the necessary insurance when buying property will allow you to relax and be confident of a steady and consistent income or problem-free asset.

If you would like expert advice tailored to your property situation, feel free to contact our friendly team at Besser and Co.