FIRE
INSURANCE - CONTRACT
In
NSW the property is at the buyer’s risk from the day of exchange of
agreements. It is also at the seller’s risk until completion. Both
parties have an insurable interest between exchange and completion.
It is not safe for either party to rely on fire insurance arranged by
the other. An insurance policy can be worthless it the insurance
proposal form contains a significant false statement or if the
premium is unpaid. If a building is accidentally damaged or destroyed
after exchange and before completion the seller can require the
buyer to complete as if it had not been damaged or destroyed.
On
completion, it is necessary that the lending institutions be
satisfied that their interests as mortgages are covered by insurance
for no less than the amount they specify. Therefore, it is necessary
prior to completion. to pay the first years premium and obtain a
policy or a certificate of currency showing the buyer as owners
and the lending institutions as mortgagees. The buyer should check
that his/her mortgagees approve his/her choice of insurance company.
Loss
or damage as a consequence of burglary or housebreaking is commonly
not covered if the buildings are not sufficiently furnished for full
habitation. So if the buyer is moving house and leaves part of
his/her furniture in one while he/she is in the process he/she will
not usually be covered if the place is broken into and the contents
stolen. If the buyer’s house is left uninhabited for more than the
period specified in the policy (usually 60 days. sometimes 30)
the insurance cover in respect of certain events defined in the
policy lapses unless he/she has obtained the prior written consent of
the insurance company.
Buyers
should check with their solicitor as to whether it is desirable to
have any other form of insurance such as public liability.