Insurance to Consider When Buying a Property
Buying a home, rental property or commercial property can be a huge financial investment – and whether you’re buying your first home or boosting your investment portfolio, it’s worth thinking about the right insurance protection. Here’s a breakdown of the different insurance types to be aware of and consider.
Insurance to consider when buying a property:
• Building insurance
• Contents insurance
• Landlord’s insurance
• Title insurance
• Life and/or income protection insurance
• Mortgage protection insurance, also known as home loan insurance
So what purpose does each of these insurance types actually serve?
Building insurance, as its name implies, is designed to provide cover for a physical building in the case of events such as fire, storms, floods or malicious damage. To find building insurance cover for your house, you might search for home insurance in Perth, Sydney, Melbourne or wherever your property happens to be located.
If you’re buying property in a strata scheme, the building will typically be covered by mandatory strata insurance which you’ll pay for through your levies. Be sure to review your strata title so you have clarity on what exactly is covered and what’s not.
Contents insurance is designed to provide cover for your belongings, such as your furniture, electrical appliances, jewellery and that sweet new sound system. If you’re buying a freehold title house you might seek out a bundled home and contents insurance policy, which can be a cost-effective way of gaining cover.
Many home buyers take out a home and contents insurance policy prior to settlement, so they’ll have cover as soon as they gain ownership of the property.
Landlord’s insurance is exactly what it says on the box; it’s designed to protect your investment property from damage as you rent out your property to tenants.
Title insurance involves a simple one-off payment and can provide protection for a number of property ownership risks that could arise at any point after settlement. These risks may include:
• Illegally built structures such as decks or carports that were built by a previous owner without council approval, and weren’t known about at settlement
• Encroaching structures, where a neighbour’s wall or carport might have been built encroaching on your land before you owned it
• Rates, strata levies or land tax that were incorrectly calculated at settlement
• Identity theft or mortgage fraud relating to the property, and more.
You can take a title insurance policy out at any time including prior to settlement, which can provide peace of mind as you’ll be covered from the moment you take ownership.
Life and/or income protection insurance
Life and income protection insurance may not be directly related to your property, but they could be worth considering if you’re about to have a mortgage repayment due every month. With a successful claim, these insurance types can provide valuable financial support in the case of injury, illness, permanent disability or death.
Mortgage protection insurance or home loan insurance
While not mandatory, some home property owners choose to take out mortgage protection insurance or home loan insurance to protect themselves against the risk of defaulting on their mortgage due to loss of employment or a serious illness. This insurance type is not to be confused with Lenders Mortgage Insurance (LMI), which is a premium added to your mortgage if you need to borrow more than 80% of the property’s value.
Considering the right cover can be one of the important steps in the home buying process and for all property types. Whether you’re currently considering home buyers insurance, insurance for commercial property or rural property insurance, you’ll be happy to hear title insurance is quick and easy to arrange. You can gain a quick quote or request cover today.