Buyer’s guide  ·  NSW

Property insurance in NSW: what lenders and strata require of buyers

Buying in NSW? Learn when your property insurance should start, what lenders usually require, and how insurance works for strata properties.

Getting property insurance in place is one of the most important steps when you buy in NSW. It protects your investment, and your lender will usually insist on it before settlement.

This guide explains when your cover should start, what lenders usually need, how insurance works for strata properties, and other insurance worth thinking about.

Updated October 2026 to reflect current law.

When should you get property insurance?

Under the Conveyancing Act 1919 (NSW), the risk of damage to the property generally stays with the seller until settlement. If you take possession before settlement, the standard contract says the risk passes to you when you move in.

So your building insurance should start no later than settlement, or the date you get early possession if that comes first.

Many buyers choose to start cover from exchange. Why? If the property is damaged before settlement, your rights against the seller depend on how serious the damage is. You may be able to get a lower price or, in serious cases, cancel the contract. But this can take time to sort out. Having your own cover can make things simpler. Ask your lawyer and insurer what suits your situation.

Your lawyer can confirm your settlement date from the contract. If you’re doing a pre-settlement inspection, you can also check for any new damage before you take over.

What do lenders need for property insurance?

If you’re borrowing to buy a house, most lenders make building insurance a condition of the loan. They commonly ask for:

• a building insurance policy that starts on or before settlement
• cover for the full replacement value of the building
• the lender to be noted on the policy as an interested party
• a certificate of currency (proof of insurance) before settlement

Requirements differ between lenders. Check your loan approval and ask your broker or lender early, so settlement isn’t delayed.

What to consider when choosing property insurance

• Sum insured. Insure for the full cost to rebuild, not the market value. Rebuild costs include demolition, rubble removal and professional fees. Many insurers have online calculators, or you can get a quantity surveyor’s estimate.
• Location risks. Flood, bushfire and storm risk can affect your premium and whether cover is available. Your contract includes a planning certificate from council (a “section 10.7 certificate”). It can show if the land is bush fire prone or affected by flood controls. Your lawyer can explain it.
• What’s covered. Check whether the policy covers flood, storm, accidental damage and legal liability, and any limits or excesses.
• Accurate information. For home insurance bought for personal use, the Insurance Contracts Act 1984 (Cth) says you must take reasonable care not to give the insurer wrong information. Answer the insurer’s questions carefully, including about past claims.
• Contents cover. Building insurance usually doesn’t cover your belongings. Consider a separate contents policy.
• Investment properties. If you’re renting the property out, look at landlord insurance. See our guide on converting a home to an investment property.

How does property insurance work for strata properties?

If you’re buying a unit, apartment or townhouse in a strata scheme, the rules are different.

• Building insurance: under the Strata Schemes Management Act 2015 (NSW), the owners corporation must insure the building, including common property, for its replacement value. You usually don’t need your own building policy.
• Public liability: the owners corporation must also hold public liability insurance for the common property.
• Contents and improvements: you should get your own contents insurance. Ask whether the strata policy covers improvements you or past owners have made inside the lot (such as new floors or kitchens). If not, you may need extra cover.
• Check the strata report: a strata inspection report before you buy should show the current insurance, the sum insured and when it expires.
• Lender requirements: many lenders don’t ask strata buyers for their own building insurance. Some may ask for a copy of the strata policy. Check with your broker.

What other insurance should buyers consider?

Title insurance is a one-off policy that can protect you against some hidden title and property problems. Examples include building work done without council approval, boundary encroachments, errors in searches and fraud. Lawyers can review what the seller discloses, but some problems can’t be found before you buy. Read our guide to title insurance to see if it’s right for you.

If required, we can help you get a title insurance quote as part of your purchase.

You may also want to consider income protection or life insurance to help cover your mortgage if something happens to you. Speak to a licensed financial adviser or insurance broker about these.

Property insurance FAQs

Do I need home insurance before settlement in NSW?

You generally need it in place by settlement, or earlier if you take possession early. Your lender will usually ask for proof before settlement.

Who insures the property between exchange and settlement?

The seller generally bears the risk until settlement. The standard contract warns sellers to keep their insurance until then. Many buyers also take out their own cover from exchange.

Do I need building insurance for a strata unit?

Usually not. The owners corporation insures the building. You should still get contents insurance, and check cover for any improvements inside your lot.

How much should I insure my home for?

Insure for the full cost to rebuild, which is often different from the price you paid. Use an insurer’s calculator or get a professional estimate.

This article is general information only and is not legal advice. It reflects NSW law at the date of publication. Please contact us for advice about your circumstances.

Related guides