Building insurance before settlement (Australia): when to start your policy

1) Do you need building insurance before settlement?

Here’s why this “safe rule” exists. In Australia, responsibility for damage to the property between contract and settlement depends on state rules and contract terms. In Queensland, standard contracts commonly put the property “at the buyer’s risk” from 5pm on the first business day after the contract date — which can be weeks before settlement. In Victoria and New South Wales, risk is commonly treated as transferring at settlement, but special conditions or early possession can change that. (We show the state-by-state timing table below with references.)

Separate to “risk,” many lenders treat insurance as part of the settlement checklist. It’s common for your bank to ask for proof of cover before they’ll release funds — usually via a certificate of currency listing the bank as an interested party. That’s why leaving insurance to the last minute can create the dreaded “settlement scramble”.

If you’re early in the buying journey, these two pages are the best next clicks: Home Loan Guide (the end-to-end process, plain English), and the First-Home Buyer Guide (deposit paths, duty concessions and common traps).

2) Why does your lender care about building insurance?

Your lender’s security is the property. If a house burns down the day before settlement, the bank still wants to know their security can be rebuilt. That’s why many lenders require evidence of building insurance before settlement — and why the policy usually needs:

• Correct start date (effective before settlement, sometimes earlier depending on state risk timing and lender policy).
• Correct insured parties (your names match the borrowers).
• Correct property address (no typos — settlements have been delayed for less).
• Sum insured that makes sense (enough to rebuild, not just the purchase price).
• Bank listed as an interested party (wording varies: “mortgagee”, “interested party”, or similar).

The practical takeaway: don’t think of insurance as a “nice to have after settlement”. Think of it as part of your loan conditions — like ID checks, payslips, and signing loan documents. If you’re refinancing instead of buying, the insurance timing is usually simpler — your property is already insured — and your focus shifts to repayments and structure. If that’s you, the Rate Review Calculator is the fastest next step.

3) When does the buyer usually become responsible for damage? (State-by-state)

The word you’ll hear is “risk”. It’s shorthand for: “If the property is damaged before settlement, who wears it?” This table summarises common positions under standard arrangements — but always confirm your specific contract and advice.

General information only. Your contract may include special conditions, early access/possession clauses, or other variations. Always confirm the risk timing with your solicitor/conveyancer for your specific contract.

4) The practical timeline: what to do (and when)

A) Before you sign/exchange: do the 3-minute prep

• Get an insurance quote ready to go (same-day activation). You don’t need to pay yet — you just want speed.
• Know your property type: house vs strata apartment vs off-the-plan vs construction (insurance differs).
• Ask your conveyancer: “When does risk pass to me under this contract?” (especially in QLD/SA/ACT).

B) On contract day (or exchange day): lock the start date

This is where most people get caught. Buyers often assume “settlement day” is the start date. In states where risk passes early (commonly QLD, SA, ACT under standard approaches), that can leave a gap. In NSW and VIC, risk is commonly treated as settlement — but lenders can still require cover before funds are released, and contract variations matter.

C) Once your loan is formally approved: ask for the “settlement conditions” list

Many lenders will ask for proof of building insurance before settlement. The most common proof is a certificate of currency. Get it early and send it to your broker/bank team as soon as your policy is active.

D) 3–7 days before settlement: do a final sanity check

• Does the certificate show the correct address?
• Does it show the correct insured name(s) (matching your loan documents)?
• Is the start date before settlement (and aligned with your state risk timing)?
• Is the lender listed as interested party / mortgagee if required?
• Is the cover type correct for the property? (e.g., strata often needs different handling).

If you’re a first-home buyer and you’re also juggling deposit paths and scheme eligibility, run your numbers through the First-Home Buyer Scheme Calculator so you’re not trying to solve everything in the last week before settlement.

5) House vs strata vs off-the-plan: what you actually need to insure

Free-standing house (most common)

Usually, you want building insurance (the structure) in place and effective at the right time. Contents insurance is optional and depends on your personal situation, but it doesn’t replace building cover.

Strata apartment or townhouse (body corporate)

Strata can be confusing because there’s often a strata building policy arranged by the owners corporation. What you need to confirm is: what does strata cover, and what doesn’t it cover? Depending on the building and policy, you might still want contents insurance (and sometimes landlord cover if it’s an investment). Lenders may still ask for evidence the building is insured — and sometimes that means supplying strata policy details.

Off-the-plan purchases

Off-the-plan contracts can have long timeframes. The “risk” timing and insurance responsibility can be different, and your lender’s requirements often kick in closer to settlement. The key is not to assume the same rules as a normal 30–60 day settlement. Make your conveyancer and broker confirm what evidence your lender will accept and when.

Construction loans / building a new home

Construction is a different category. There can be builder insurances, contract works insurance, and different exposures while the property is being built. Don’t assume your standard home building policy is the whole story. Your broker can help align the loan requirements, but the right insurance structure should be confirmed with your insurer and building contract specialist advice.

6) Certificate of currency: the settlement-proof checklist

If your lender asks for proof of building insurance, they’re usually asking for a certificate of currency. In plain English: it’s a one-page document showing the policy exists and is in force. Many lenders want this before settlement.

Checklist (print this and tick it off)

• Policy type: Building insurance (not contents only).
• Property address: matches the contract/loan documents exactly.
• Insured name(s): matches borrower names (especially if two borrowers).
• Start date: before settlement (and aligned with your state’s risk timing if applicable).
• Period of cover: shows the policy is current (not expired or pending).
• Interested party/mortgagee: bank listed if your lender requires it.
• Sum insured: sensible rebuild figure (not just the purchase price).

Helpful reads (external): Westpac’s explainer on insurance before settlement and why it varies by state, and guides on certificates of currency and lender requirements. Westpac • Certificate of currency basics • ING settlement checklist note

7) Mistakes that cost time (or create settlement panic)

1) Starting insurance on settlement day (in a state where risk starts earlier)

In QLD, standard terms commonly put risk onto the buyer from 5pm the first business day after the contract date. If your policy starts on settlement day, you could have a gap. If you’re buying in QLD, this is the #1 “do it early” scenario.

2) Buying a strata apartment and assuming you don’t need to provide anything

Some lenders still want evidence the building is insured. Sometimes that’s satisfied by strata documentation. The point is: confirm what your lender will accept while you still have time.

3) Wrong address formatting or borrower name mismatch

Sounds trivial. It’s not. A bank settlement team can bounce documents over a missing unit number or a name mismatch. Fixing it can take hours or days depending on the insurer.

4) Confusing “building” and “contents”

Lenders care about the building (security). Contents insurance protects your stuff. It doesn’t rebuild the house. Make sure the certificate is for the building policy.

5) Assuming the purchase price equals “sum insured”

Rebuild costs and purchase prices are not the same thing. Demolition, site works, and regulations can make rebuild costs higher than expected. You want the insured amount to reflect rebuild, not market value.

8) Next steps (and the fastest way to remove guesswork)

If you’re buying soon, you’ll get the most clarity by doing two things in parallel:

• Confirm the legal timing with your conveyancer/solicitor: “When does risk pass under my contract?”
• Confirm the lender timing with your broker/bank: “What proof of insurance do you require before settlement?”

If you want us to help you pull those pieces together, start here:

• Start my checklist (we’ll confirm what your lender needs and when).
• Contact Rate Challenge (book a call, send documents, or ask a quick question).
• Mortgage Broker Melbourne (if you’re buying in Melbourne).
• Home Loan Guide (if you want the full process from deposit to settlement).

Rate Challenge compares 35+ lenders and helps buyers Australia-wide. We’ll make sure your plan is not just “approved”, but also settlement-ready.