What Is a Certificate of Currency: Your 2024 Guide

What Is a Certificate of Currency

What is a certificate of currency and when do you need one?

Simply put, a COC is a document that shows you have insurance. It is typically required by mortgage lenders and banks as proof that the property you are buying is adequately insured. 

Read on below to find out more about a COC, what it covers and when you are required to provide one.

But first… 

Certificate of Insurance vs Certificate of Currency

Before we take a closer look at what a Certificate of Currency is and what it covers, it is important to know that a COC is also called a Certificate of Insurance, i.e. these terms are used interchangeably for the same document. 

Worth noting: A COC is also known as a home insurance certificate of currency. 

What Is a Certificate of Currency and When Do You Need It?

As mentioned above a Certificate of Currency in Australia is a document confirming that you have a valid and effective insurance policy in your name. Banks, financial institutions and lenders usually want to see proof of insurance as part of their loan requirements. 

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However, other parties might also require a COC. For instance, a contractor might be asked for a certificate of insurance to confirm they have public liability cover in case they cause damages to the property or are involved in legal proceedings (either with the employer or another contractor).

In short, a Certificate of Currency could be required in any instance where liability losses are an issue.

When Is a Certificate of Currency Not Required? 

You don’t need a certificate of currency when you are building a home (this is covered by builder’s insurance) or when you are buying a unit or apartment (this is covered by strata insurance). 

You also won’t need a COC when building on vacant land since there is no building to insure. 

Do You Need to Provide a COC When You Renew Your Policy?

No, the lender assumes that your insurance is renewed and does not require any proof of renewal. 

However, if you fail to renew your policy and the bank is aware of this, they might charge interest or take legal action as you are basically violating the terms of the loan agreement. 

What is a Certificate of Currency Car Insurance?

A certificate of currency in Australia can be provided by your insurance company as proof of car insurance as well. 

The COI lists all the important details of your car insurance policy and can be presented to your lender when applying for a car loan

Keep in mind that comprehensive car insurance is mandatory in Australia and your lender will not approve your loan application without it. 

What Should Be Included in the Certificate of Currency?

A certificate of currency in Australia typically includes the following information: 

  • Details about the insured party, including the name and address of the insuree, or the address of the investment property;
  • Details about the policy, such as the policy type, number and expiration date; 
  • The protection period, i.e. the time and date when your policy starts and expires; 
  • Details about the interested party, in this case, the name of the bank or lender requesting the COC; 
  • The maximum amount you are covered for under the policy;
  • How much premium you have been paid, when and how (what payment method you used). 

How Do I Get a Certificate of Currency?

Some insurance providers might send your certificate of currency with your schedule mail, once you renew or buy a new policy. 

However, in most cases, you can download the COC from your insurer’s site, or contact them for a copy. In either case, make sure you let the insurance company know who wants the certificate, i.e. the name of the bank or lender, so they can put it in the document. 

Also, check whether the property is insured for at least the minimum period required by your lender. If not, you will probably need to take out a new policy. 

Worth noting: Your insurance policy should start before the settlement date. Usually, the seller has insurance over the property until the settlement date, while you have insurance over the property during the purchase period. This way the property is insured at all times and all parties are covered in case of unexpected events. 

How Much Does a Certificate of Currency Cost?

Most insurers will provide a Certificate of Currency for free, however, some might charge a nominal fee of around $44, which covers paperwork costs and is paid in addition to your monthly or annual premium. 

Note that it usually takes 3 days for the insurer to process the information and issue the certificate of insurance. 

Why Do You Need a Certificate of Currency When Buying a Home?

Essentially, a certificate of currency, or home insurance certificate, shows the lender that the property you have borrowed money for is insured and that they can be reimbursed in the event of loss or damages.

If your property is damaged and not insured, then the bank or lender might be at risk since they hold the mortgage over the property as security against the loan. 

Bottom Line

Anyone applying for a home or car loan will need to present proof of insurance, i.e. a certificate of currency. Luckily, obtaining one from your insurer is fast and usually free, so this is one less hurdle you need to cross on your way to getting the financing you need. 

FAQs

1.Why does the bank need a certificate of currency?

When taking out a mortgage, the bank, or lender, holds the property as security against the loan. If the property is not insured and something unexpected happens, like a fire or flood, the bank could be at risk, which is why they ask the borrower for proof of insurance.

2.Do you need a certificate of currency when refinancing your loan?

When you refinance with a new lender, you will be required to present a copy of your certificate of currency that lists your new loan provider as the interested party, 

3.What is a certificate of currency in Victoria?

The COC proves that you are registered for WorkCover insurance,  a type of policy designed for people who might get injured because of their work. It is typically required when hiring a contractor or getting workers on a building site.

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