When exactly does my responsibility to insure the property begin?

Under a standard REIQ contract in Queensland, the risk for the property typically passes to you at 5:00 pm on the first business day after the contract date. This means you should have building insurance organised almost immediately after signing, even though you won't settle or receive the keys for several weeks.

Should I set my insurance cover to the same amount I paid for the house?

Not necessarily; you should insure the property for its full replacement cost rather than its purchase price. The cost to rebuild the structure from scratch, including modern labour and material expenses, is often quite different from the market value of the land and building combined.

What are the risks if I wait until the settlement date to arrange insurance?

Waiting until settlement is risky because you are legally liable for damage to the property from the day after the contract is signed. Additionally, most lenders will refuse to release funds without proof of building insurance, which could lead to a delayed settlement and costly penalty interest.

Does the body corporate handle all insurance if I am buying an apartment?

While the body corporate typically organises building insurance for the entire complex and common areas, you are still responsible for your own contents. It is also important to check the disclosure documents to see if you need additional cover for any specific internal fixtures or improvements made to your lot.

How should I handle insurance if I am planning to buy at an auction?

Because auction contracts are usually binding as soon as the hammer falls, you should arrange conditional insurance cover before the auction day. Many Australian insurers allow you to set up a policy that only activates if you are the successful bidder, ensuring you are protected the moment the contract is signed.

QLD Property Insurance for First Home Buyers 2025

You have found the house and signed the contract, but there is a detail that often surprises many Queensland first home buyers. According to our analysis of hundreds of property transactions, you may already be responsible for insuring that property, even though you do not own it yet.

Generally, under standard terms, the REIQ contract used in many Queensland property transactions shifts insurance responsibility to the buyer one business day after the seller signs. If something happens to the property between then and settlement, you could be left dealing with the results.

Why Insurance Responsibility Shifts Before You Own the Property

This timing often surprises many people. You have not settled, you do not have the keys, and the seller still lives there. Yet under typical contract terms, the risk passes to you almost immediately.

The reasoning behind this arrangement relates to who has the most to lose. Once you are contractually committed to buying the property, you have a financial interest in its condition. If a storm damages the roof or a fire guts the kitchen before settlement, you are the one who will either need to proceed with a damaged property or try to terminate the contract, which has its own difficulties.

This is why arranging building insurance should happen within days of contract signing, not weeks later when you are closer to settlement. As outlined in the first-time buyer's guide to Queensland property law, understanding your contractual obligations early can help prevent unexpected costs.

Common Types of Insurance Cover

Building Insurance

This covers the physical structure, including walls, roof, floors, and built-in fixtures. It protects against damage from fire, storms, vandalism, and similar events. In many cases, your lender will require building insurance before they release funds at settlement, but it is often wise to have it in place much earlier than that.

When getting quotes, make sure the sum insured reflects the full replacement cost of the building, not the purchase price. These figures are often quite different. A property might cost significantly more or less to rebuild from scratch than the price paid, depending on construction type and current building costs.

Flood Cover

Queensland's weather patterns mean flood risk deserves special attention. Standard building policies do not always include flood cover automatically, and some properties in high-risk areas may have limited options or higher premiums.

The ACCC's insurance monitoring report indicated that the government's cyclone reinsurance pool has helped moderate premiums in northern Queensland, but flood cover remains a separate consideration that varies by location and insurer.

Check your policy wording carefully. "Flood" has a specific definition in insurance contracts that may differ from what you would call a flood in everyday conversation. Stormwater runoff and riverine flooding are often treated differently.

Contents Insurance

Contents cover protects your belongings, such as furniture, appliances, clothing, and electronics. You will not need this until you actually move your possessions into the property, which typically happens after settlement. However, it is worth arranging at the same time as your building cover so you do not forget.

What Happens If You Do Not Arrange Insurance?

The results depend on what goes wrong and when.

Typically, if the property is damaged before settlement and you do not have insurance, you are generally still required to complete the purchase. The contract may provide some rights to claim against the seller's insurance or negotiate, but these provisions have limits and conditions.

Typically, your lender also will not settle without evidence of building insurance. So even if nothing happens to the property, you will be rushing to arrange cover at the last minute, which can delay settlement and potentially trigger penalty interest or other issues.

Special Considerations for Off-the-Plan Purchases

Typically, buying an apartment off the plan creates a different insurance timeline. You cannot insure a building that does not exist yet, and once it is completed, the body corporate typically arranges building insurance for the entire complex.

In many cases, your responsibility in a strata situation extends only to contents insurance and any improvements you make inside your lot. The body corporate's building insurance covers the structure itself, common areas, and fixtures that came with the property.

Check your contract and the disclosure documents to understand when your obligations typically begin and what the body corporate's insurance covers. Some policies have gaps that might affect you.

Auction Purchases: A Tighter Timeline

In many cases when buying at auction, the contract typically becomes binding when the hammer falls. Generally, there is no cooling-off period. This means your insurance responsibility often begins the next business day, and you will not have the benefit of a few days to think about it.

The practical approach is to arrange conditional insurance cover before auction day. Most insurers will let you set up a policy that activates if you are the successful bidder. This way you are covered from day one without needing to make urgent phone calls while celebrating your purchase.

How to Get the Right Cover

It is often helpful to start by getting multiple quotes. Premiums and coverage details vary between insurers for similar properties.

When comparing policies, look beyond the premium to understand:

The excess, which is the amount you pay before the insurer covers the rest
Exclusions, or what the policy does not cover
Sum insured, ensuring it is adequate for full replacement
Whether flood cover is included or optional
Claims process and insurer reputation

Typically, your conveyancing solicitor cannot recommend specific insurers or policies, but they can explain your contractual obligations and the timing requirements. If you are using the First Home Owner Grant or stamp duty concessions, make sure your insurance arrangements do not create any complications with those applications.

Getting Professional Advice

Insurance requirements and contract terms can vary depending on your specific situation. The property's location, construction type, and the particular contract used all affect your obligations.

If you are unsure about your insurance responsibilities or want to understand how the contract allocates risk between you and the seller, it is often worth speaking with a solicitor before signing. A quick conversation now is often more cost-effective than discovering a gap in your coverage after something goes wrong.

For questions about your conveyancing obligations or to have a contract reviewed before you commit, contact our team by phone or submit an enquiry through our website.