insurance on new house purchase with cracks?

s77

Hi all,

We are hoping that someone with more knowledge on the subject than us might be able to give us some pointers!
To cut a very long story short, we have bought a property through auction and put a hefty deposit down with completion due in just over 4 weeks from now.
We had a mortgage offer but it has been delayed as a crack in the mortar was found by the mortgage valuer. It now seems likely that they will release the funds on the proviso that we are able to obtain buildings insurance. We are prepared to do remedial works on the house, that is not our issue. The property is still being insured by the former owner. We just want to know legally if the insurers are obliged to continue to insure the propery with new owners? We assume that we have to declare the cracks?
There is no meantion of subsidance by the valuer but he does state that there is
" evidence of movement observed in form of mortar course cracking to some brick external walls. Not possible to say if further significant movement will occur".
The mortgage risk assessment team have implied that they will not need a structural survery if we can get buildings insurance, although the underwriters are yet to confirm this.
Does anyone know where we stand with regard to obtaining continuation of the existing insurance to the building?

Many thanks in advance to anyone who might be able to shed some light on this for us.
:A

m_13

When you buy a property at auction you exchange on the day - did you do this or was this bought through private treaty after the auction?

As soon as you exchange on any property you must cover it for rebuilding ie buildings insurance, as exchanging means you are legally obliged to complete and therefore the risk is yours.

The previous owner has no obligation to maintain buildings insurance as the property will now pass to you on completion.

The previous owner's building insurance company have no legal obligation to offer you buildings insurance.

Why aren't you asking the previous owner to claim for the cracks under their buildings insurance? I presume they have taken place whilst they are the owners?

A specialist insurer should be able to find buildings insurance for you. I've seen Woodstock Insurance Brokers on 01622 776676 recommended before (I have no knowledge of them).

s77

Thanks for the quick response!
Yes the property was bought outside of auction as it failed to meet its reserve.
We are in contact with the owner who has said that he wishes to keep his insurance going until completion. We had a situation in the past where we purchased a house with substantial cracks which the structural surveyor felt was a result of bomb damage, although he could not be conclusive in this. We were able to continue the insurance that the previous owner held without too much difficulty and did the remedial work ourselves.
We are pretty sure that the previous owner of this property will not make any claim as they want to sell the house as quickly as possible and with as least hassle as possible (hence the original auction) but we are just worried that the present insurers might for some reason say they won't insure the house, even if the policy is the same, just with a different owner. We are not sure what current details they hold on the property with regard to the repair work needed. Once they are aware that remedial work is needed, and that we are happy to carry this out without putting in a claim, can they refuse to insure a house that they were already insuring?

m_13

Of course they can refuse, especially if the property is in worse condition of repair than the owner told them.

I remember after the floods that a lot of insurers refused to continue insuring the houses that were flooded but the Government put pressure on them to continue.

Have you tried to get cover from somebody else?

s77

Not yet as the specialist companies we have looked at that take on houses with movement such as subsidence seem to specifiy that the house has to already have been underpinned (there has been no mention of subsidence yet with this house) or have had the remedial works carried out (which we are happy to do but obviously we need buildings insurance whilst we are doing so). Surely if the insurance company have a choice between us making a claim on them (as I believe up to 8 weeks after a purchase of house a claim can be made on the previous insurer) or us continuing the policy and undertaking the remedial work ourselves without any claims they would prefer the latter?

m_13

I'd try asking them but of course, they'll have to take your word that you aren't going to claim. What if it's worse than you think at the moment?

s77

You are right in that they would be taking our word for it but it would be more favourable in their eyes than a definite claim, we hope!
We have taken on a few renovation projects in our time and are not phased by any work that might be required and we intend to buy this house to live in for many many years to come. We just need to get that insurance to enable to lenders to release the funds to allow us to do so. Fingers crossed!

dacouch

You should take over the existing owners Insurance which is the normal course of action in these circumstances

s77

Many thanks for all your replies and for taking the time to do so. We are not intending to make a claim as I said but are worrying that the insurers may refuse to continue to insure once they are aware of the crack.
Quizzical Squirrel, did your insurance company know about the crack before you took over the insurance and did they raise any issue with providing cover on the house?

franklee

Actually I believe that so long as the insurance is continuous the current owners insurer is obliged to offer insurance to you. What's more you can make a claim for damage that happened whist he had cover. Don't be fobbed off on this one, keep at the same insurer till they offer you cover. Also ask the current owner to talk to the insurer if necessary and get the contact details of the person you need to speak to.

I went though this with a property known to have subsidence and talked in detail to the insurers and they said they are obliged to offer cover to the buyer.

dacouch

They are not obliged to offer cover but there is an agreement amongst the vast majority of Insurers that they will transfer the policy (Subject to you being acceptable eg no criminal convictions and acceptable amount of claims etc).

What normally happens is the vendor contacts their Insurers, explains the situation and obtains a letter confirming they will transfer the policy. You can then give this letter to your solicitor who can pass it over to your mortgage provider.