When risk passes. Under standard Victorian residential contracts, it is the seller's responsibility to protect the property up to settlement. The seller must take reasonable care of the property and pass it on to the buyer at settlement in the same condition as it was on the day of sale.
Buyer's insurance obligations. Buyers are advised to arrange insurance cover for the home/building, contents and public liability immediately on entering into a contract. This should occur before the property is at their risk, to avoid complications if damage occurs before settlement. In addition, lenders typically require proof of insurance before releasing settlement funds.
Why not rely on the seller's insurance. You should not depend on seller coverage because: the seller may not obtain insurance, may cancel it, the triggering event may fall outside coverage, or other factors may preclude recovery.
Strata properties. For apartment blocks, the body corporate insures common property, assets and building structure, with costs shared by lot owners. Lot owners must separately insure their interior with home contents insurance and public liability insurance. For low-rise developments (townhouses), responsibility depends on whether buildings share common walls.
Risk and insurance at a glance (VIC)
| Scenario | Who bears the risk | Who insures the building | What to do |
|---|---|---|---|
| Standard contract, before settlement | The vendor | The vendor must hand it over in the same condition | Still arrange your own building, contents and public liability cover on signing — your lender will require it |
| Strata / apartment | The vendor (until settlement) | The body corporate (building and common property) | Insure your interior — contents and public liability |
| Townhouse (low-rise) | The vendor (until settlement) | Depends on whether the buildings share common walls | Check the owners corporation rules; arrange your own building cover if needed |
| Property damaged before settlement | The vendor | — | You may have rights to end the contract or adjust the price — act on your conveyancer's advice, and don't rely on the vendor's insurance |
General information only — not legal advice. Confirm your situation and the exact contract terms with a licensed conveyancer or solicitor.