Signing up to buy without being sure you can get insurance can be a catastrophe

Anna and Scott signed an Agreement for Sale and Purchase to buy their first property, which happened to be next to a river.  They were ready to confirm the finance condition in their Agreement when their solicitor pointed out that the LIM report recorded that the property had been flooded three times in the last two years.  

They hurriedly called their chosen insurance company to find out if they could get insurance over the property, which was required by their bank in order for them to get finance.  They discovered that they could not obtain insurance for flooding for the property because it had been “red flagged” as a high risk for flooding.  Their bank would not provide mortgage funds to help them purchase as the property could not be adequately insured.  The same would apply for properties prone to slippage, liquefaction and other natural disasters.

They were fortunate to be able to cancel the Agreement based on their finance condition, and that relief helped to soften the blow of losing out on the purchase.

This should serve as a warning to people purchasing properties to discuss insurance with an insurance company or a broker as soon as they put in an offer on a property, because if you cannot insure a property you will have considerable problems, including not being able to get mortgage finance.