Insuring Your House Before Settlement
Before you even can settle on your new home you will need proof that you have house insurance. Why? In most cases you need to borrow money off a bank to buy, your bank is using the house as collateral for the loan and wants to make sure that if anything unexpected happens to the house there is insurance to cover it – they are protecting their collateral! Therefore your bank will require house insurance as a condition of your mortgage.
Get your insurance organised well in advance when buying a house and get your insurance company to send a certificate with proof of cover to your lawyer. The settlement day process, and drawing down of your mortgage, cannot be done if this proof of insurance document is not available.
Insurance can be a bit of a minefield and it really pays to shop around and to read the fine print of each policy carefully before choosing. Things such as market value replacement, versus sum insured replacement should be fully understood and what is covered and not covered should be worked out. What kind of insurance you choose to take out is ultimately a personal choice. The consumer website has the most comprehensive information on insurance, and even compares policies.
Gradual damage is an interesting part of insurance, and it can be a real surprise as to the level of cover for this you have in your policy. Here is a great article about gradual damage and insurance.
Cost of insurance can vary widely and it is a good idea to find out what insurance is the best value for money. Lately insurance premiums seem to have gone up hugely, so it may be a good time to look around at someone other than your current insurer. With insurance, the cheapest insurance is likely to be inadequate when it comes to insuring your home – so make sure you know what you want/need in your insurance policy and choose one that gives you this. Like with many things, putting some time and effort into getting familiar with house insurance will mean you don’t get any nasty surprises and you will know what you are paying for.
Are you about to settle on a house? The settlement section in the Propertytoolbox house buying guide has all you need to know.
Tags: Banks, House Buying, Insurance, Moving In, Settlement