Client of mine was due to settle on a house today. House Burnt Down the day before. Good reminder as to why insurance is important straight away. In QLD Standard Form Contracts the risk passes to the Buyer a business day after the Contact Date. In the event the dwelling is damaged but habitable then the Buyer still needs to settle. In the event that the dwelling is not habitable then there is a statutory provision allowing you to terminate. The important thing to note with that is that you still need to claim on your insurance, it is just that the Seller gets the money, not you. You will need to pay the excess etc.