buildings insurance before sale completion

Soapstar_2

Hi all,


Am about to exchange on a house purchase and thought that everything was in place to exchange having bought buildings insurance to start from the proposed completion date. However, our sols have today told us that this isn't sufficient and that we have to have insurance in place from the date of exchange (i.e. sooner, by about 3-4 weeks). Having relayed this to the insurers (Liverpool Victoria), they say that would not be possible as they will not insure a property that we have not yet taken ownership or access of.

We seem to be a in a bit of a catch-22 position. Can anyone advise of any insurers who are willing to provide buildings insurance from point of exchange?

And/or, any thoughts regarding the validity of the solicitors' advice?

Urgent replies gratefully received as feeling a bit concerned at these developments :eek:

Many thanks in advance

Richard_Webster

Tell LV this is a normal situation for thousands of people exchanging contracts to sell and buy and if they won't insure you someone else will.

They are being silly - do they want your business or don't they?

System

When I bought my insurance the lady said well done as not enough people insure themselves before completion!

I tried 4 insurers for quotes and they all had no problem with this.

cymrumam

Normal practice in my experience to insure from date of exchange - never had an insurer have a problem with it either

tyler80

The initial paperwork from my solicitor asks me for details of buildings insurance. How am I supposed to take out a policy when I don't even have a rough timeline for things? I'm thinking it's going to be a whole lot less hassle to get the buildings insurance through the mortgage lender

flimsier

It's definitely what you should do as you are liable.

Chakani

LV do insure from exchange, as do most if not all insurers - we had just such a quote from them only two days ago - perhaps there was some sort of misunderstanding?

Yorkie1

tyler80 wrote: »

The initial paperwork from my solicitor asks me for details of buildings insurance. How am I supposed to take out a policy when I don't even have a rough timeline for things? I'm thinking it's going to be a whole lot less hassle to get the buildings insurance through the mortgage lender

I just got a quote and provided those details - didn't activate the quote until exchange occurred.

timmyt

The area of property insurance is a good way to weed out the poor conveyancers from the good. So many conveyancers do not understand the insurance rules and just say you must insure from exchange. Not necessarily correct.

It is all about whether the contract passes over the ‘risk’ to the Buyer (i.e if the Property is damaged to a material extent, tough, the Buyer still has to proceed) or does it stay with the Seller (i.e if the Property is damaged to a material extent, the Buyer can withdraw from the deal and each party goes their own way and the Seller claims on their own insurance, as just one of those things).

Clearly if the ‘risk’ of damage passes to the Buyer, only in this case will they be advised to insure. (Just so you know, often that means double insurance as of course the Seller will still maintain their insurance, as they’d be crazy to cancel as the Buyer could pull out even after exchange so you want to make sure your house remains insured – and new double insurance rules gets rid of the old worry of insufficient pay out).

Ok, some Lenders say you should insure from exchange if you are borrowing with them, but that makes no sense, and many solicitors ignore that - if they can make the contract risk stay with the Seller - as the deal wouldn’t get as far as needing the mortgage money on the day of Completion, so no loss to the Lender.

However, back to my main point - as a Buyer's lawyer, you should be checking if your client is best served by taking the risk and so being under an obligation to insure. Very bad practice to just tell them to, especially when the Seller is not themself buying.....

Why:

Selling only
If you are selling only (i.e no purchase) then your Buyer will quite rightly say, 'why should I be insuring your house as you are still living in it'. Hard to counter, and so if I were acting for the Seller I'd have to agree, and my contract would not then pass the risk to the Buyer and the Buyer is free to insure at the point of Completion.

Purchase and Selling
In this case, I have a reason to tell the Buyer to insure from exchange. I can reply 'you have to insure because the property my own clients are going on to buy has a contract telling them to take the risk and so insure. As a result, you cannot be allowed to back out for fire damage, as my clients would be stuck to still complete on their new purchase’.

So, in summary:
- Buyer should take the risk only when the Seller is also buying onwards


(The above is also an advert for why it is daft to try and do your own conveyancing without using a lawyer - aside from the fact that the lawyer you face will always be able to take advantage of you)

LV=onMoneySavingExpert

Hi MoneySavingNewbie

It’s LV= here. I’m sorry to hear that you were told that LV= would not insure you when you exchanged – it is actually our standard practice is to insure new owners from the point of exchange. I can’t comment on your particular case as I don’t have all the details but please would you email me at [EMAIL="pressoffice@lv.com"]pressoffice@lv.com[/EMAIL] with your details and I will look into this for you?

kingstreet

FWIW I normally do the buildings and contents insurance for my clients a few weeks before exchange. On exchange day, I put the buildings cover into force when asked by the solicitor, effecting the contents cover on completion day, unless told otherwise.

I've never had a problem with that.