04/03/2025
Information for Buyers about insurance for around Cyclone Alfred?
With cyclone Alfred upon us, it’s crucial to remind your buyers about Condition 8.1 of the REIQ contract, which states that the property is at the buyer’s risk from 5:00 pm on the first business day after the contract date.
This means that if a buyer terminates the contract after a cyclone, they could still be liable for any damage to the property that occurred while they were at risk. However, if damage occurs while the property is at the buyer’s risk, Condition 6 provides that the buyer may have termination rights if the seller has not taken reasonable steps to minimise risk and ensure the property remains in a reasonably habitable condition at settlement.
Additionally, if a cyclone or storm prevents settlement from occurring on the due date, this may constitute a Delay Event under the contract. A Delay Event can extend settlement no less than 5 business days nor more than 10 business days beyond the original settlement date, allowing time for necessary repairs or other arrangements before completion.
To help protect buyers and prevent contracts from terminating, some insurance companies (like CGU) are still offering storm and cyclone cover after a 48-hour waiting period. This means that if a policy is in place by 2pm today, coverage will commence from 2pm Thursday.
Other insurance companies (like QBE) are also offering similar policies, but some may have specific terms from the underwriting companies, so it’s worth confirming policy details directly.
To further safeguard buyers, we strongly recommend including the following special condition in contracts:
“The buyer and seller agree that the property remains at the seller’s risk for the first 7 days from the date of contract, in an amendment to condition 8.1, and the buyer assumes risk from day 8 onwards.”
This simple amendment can provide additional protection and peace of mind for all parties involved.
