Of all the last-minute admin before settlement, insurance is the one that can genuinely stop your purchase in its tracks. Not because it's complicated, but because it's easy to leave until the week of, and your bank simply won't release your loan without it.
The short answer
You need building insurance in place, effective from settlement day, before your bank will release your mortgage funds. It has to cover the full replacement value of the property, and you'll need to give your conveyancer or bank a certificate of currency proving cover is confirmed, not just quoted.
Why the bank insists on this
Your mortgage is secured against the property. If it burned down or was seriously damaged the day after settlement with no insurance in place, the bank's security would be worthless, and so would a good chunk of your own equity. That's why proof of cover is a non-negotiable part of every bank's settlement requirements, not a Kemba rule or a nice-to-have.
The cover has to be effective from settlement, meaning the moment the property becomes legally yours, not from whenever you happen to get around to it afterwards.
What "full replacement value" actually means
Insurers generally price building cover based on the cost to rebuild the home from scratch, not the purchase price you paid for it. Land value, location premiums, and the price you negotiated don't factor into the rebuild cost the same way. Most insurers offer:
- An online calculator based on the home's size, construction, and features, or
- A registered valuer's assessment, for larger, older, or more complex properties.
Under-insuring to save a few dollars a month is a real risk. If cover doesn't match true rebuild cost, you can be significantly out of pocket if you ever need to claim.
What a certificate of currency is
This is the document your bank actually wants to see: written confirmation from the insurer that a policy is in force (or will be, from a specific date), covering a specific property, for a specific amount. A quote isn't enough. An email saying "we'll sort it" isn't enough. The bank needs the certificate itself, usually a day or two before settlement.
When to actually arrange it
The safe window is: once you're confident settlement is proceeding, but before the week of settlement. In practice that usually means:
- Get quotes during your conditional period, so you know roughly what cover will cost and there are no surprises to your budget.
- Confirm the policy once you're unconditional. At this point the purchase is genuinely happening, so it's the right moment to lock in cover.
- Have the certificate of currency ready at least a few days before settlement, so your conveyancer isn't chasing it at the last minute.
Leaving this until settlement week is one of the more common, entirely avoidable reasons a settlement gets delayed. See our settlement day guide for how insurance fits into everything else that has to line up.
Contents insurance: separate, and up to you
Building insurance is the one your bank requires. Contents insurance, covering your furniture, appliances and belongings, is entirely optional and not something any bank checks for. Most people arrange it around the same time as building cover simply because it's convenient, and some insurers offer better pricing when you bundle the two.
A quick word on what KiwiSaver can't cover
Your KiwiSaver withdrawal goes towards the purchase price, not insurance premiums or any other settlement costs. Insurance needs to be budgeted for separately. See our KiwiSaver first home withdrawal guide for what it can and can't be used for.
How Kemba helps
Insurance shows up on your dashboard as one of the things to sort in the run-up to settlement, with a clear deadline rather than a vague reminder, so it's never the thing holding your loan back on the day. Fixed $2,500 + GST, disbursements included, NZ-qualified people doing the work.
Frequently asked questions
Do I need insurance before settlement in NZ?
Yes. Your bank requires proof of building insurance, effective from settlement day, before releasing your mortgage funds. It's a standard requirement across all New Zealand lenders, not something you can skip or arrange afterwards.
What is a certificate of currency?
It's a document from your insurer confirming that a specific policy is in force, or will be from a specific date, covering a specific property for a specific amount. It's what your bank needs to see before settlement, not just a quote.
How much building insurance cover do I need?
Enough to cover the full replacement cost of rebuilding the home, not the purchase price you paid. Most insurers calculate this through an online tool or a registered valuer's assessment based on the property's size, construction and features.
When should I arrange house insurance?
Get quotes during your conditional period so you know the cost, then confirm the policy once you're unconditional and settlement is genuinely proceeding. Aim to have your certificate of currency ready at least a few days before settlement.
Is contents insurance required to settle?
No. Only building insurance is required by your bank. Contents insurance is optional and covers your belongings rather than the structure, though many people arrange both at the same time for convenience.
