Property purchases and insurance – are you covered?

November 18, 2025

When purchasing your property, it probably doesn’t come to mind whether there could be a problem with getting insurance, or that the premiums may be out of your budget.

While it’s not a legal requirement in New Zealand to have insurance for a home when you are purchasing, it is a non-negotiable requirement of your bank if you are borrowing money to purchase it.

With many insurers looking into the impacts of environmental changes in New Zealand, the effect on insurance is becoming clear. Premiums are getting higher, with some higher than others depending on the area you are purchasing in. For others in certain areas, insurers are declining to insure at all.

You need insurance to access borrowed funds

Any lending taken out on property must have insurance in place before your bank will allow the funds for your loan to be drawn on. Confirmation of this must be forwarded by your solicitor to the bank, prior to settlement date.

You may not realise your property is classified as ‘high risk’, particularly if you did not get a LIM report as part of the purchase process. If you cannot get insurance, you cannot draw your lending; it is as simple as that.

What happens if you can’t get insurance?

This means that if you have not managed to arrange a confirmation of insurance prior to confirming your agreement unconditional, or you find out that the premiums are going to be a lot higher than your budget allowed, you are left with an obligation to settle regardless. You could lose your deposit if you do not settle.

What should you do?

To ensure you are protected, we recommend you include insurance conditions in your property sale and purchase agreement. We are here help you – if you’d like to discuss your insurance further, get in touch with our property team today.