FTB - nearing completion, insurance question

kingstreet

spunko2010 wrote: »

Forgive my ignorance but why is it necessary to take out the policy now? Seeing as one can sign up for B&C insurance on the internet and start the cover instantly...

Just to add to what G_M has said, he'll also be expected to ensure the cover is acceptable to the lender, so details of what will be in the terms and conditions is needed before the cover actually starts.

lizzyshep

Thanks for starting this thread, I'm in a similar position (hoping to exchange this week) and currently sorting out insurance . I have a couple of questions. First, I need to ask the seller some things (e.g. do smoke detectors work, any cracking walls ever, type of locks etc) - what if they give me incorrect answers, would it invalidate the policy? Must I visit the house to check these things out for myself? Solicitor says it is ok to just ask the seller. Also, one question is whether the property is in a good state of repair, only 1 thing was red on Homebuyer Report (back door rotting) but several things amber (as to be expected for a 100 year old house). Do I select yes or no here? Surely only new properties will be in perfect repair? Thanks for any help!

sonastin

lizzyshep wrote: »

Thanks for starting this thread, I'm in a similar position (hoping to exchange this week) and currently sorting out insurance . I have a couple of questions. First, I need to ask the seller some things (e.g. do smoke detectors work, any cracking walls ever, type of locks etc) - what if they give me incorrect answers, would it invalidate the policy? Must I visit the house to check these things out for myself? Solicitor says it is ok to just ask the seller. Also, one question is whether the property is in a good state of repair, only 1 thing was red on Homebuyer Report (back door rotting) but several things amber (as to be expected for a 100 year old house). Do I select yes or no here? Surely only new properties will be in perfect repair? Thanks for any help!

If you take all reasonable steps to determine the correct answers and inform the insurer as soon as you become aware of anything material that you got wrong or didn't know, they will find it a lot harder to avoid paying out. It is highly unlikely that anything will go wrong but lets take a worst-case scenario:

House burns to the ground. Loss adjusters come along and say that the smoke detectors didn't work and you claimed they did so insurer says he's not paying out...
firstly: was anyone in the property? would they have been aware of the fire any earlier had the smoke detectors been functional? would the fire brigade have been able to respond any quicker had they been alerted sooner? would they have been able to stop the progress of the fire and reduce the cost of the damage had they arrived earlier? The failure of the smoke detector might not have been material to the loss incurred and the insurer should not avoid cover on this basis.

secondly: how often are the smoke detectors tested? were they working at the last test? was there anything to indicate to you (no!) or the vendors that they had stopped working since the last test? You are obliged to disclose all material information that you have available to the insurers so that they can set their premium. If you fail to tell them something that they need to know they can avoid cover but only if you can be expected to know about it to tell them.

Ask the vendors - preferably in writing, even if it is just a quick tick-sheet / yes-no questionnaire and then use this information as "to the best of your knowledge". On completion, check everything for yourself and update your insurers and/or put right anything that you got wrong.

lizzyshep

That's a really helpful answer, thank you very much :-) I've emailed the seller so hopefully she will reply soon, then I have her responses in writing and can contact the insurance company after we move in if anything looks incorrect. Thinking about it, this must be quite common as up until you move in you only have the selller's word unless you go round and examine the property yourself.

LittleMissAspie

sonastin wrote: »

It is a grey area as to who is responsible for the insurance between exchange and completion: you are committed to purchase the property from exchange but the vendor is obliged to had it to you at completion in the same state as it was in on completion. So if it burns down between exchange and completion, you will be obliged to buy

No you're not obliged to buy it, the contract is void. It's in the buying regulations.

Edit: Oh wow they've changed it. When I bought less than 18 months ago the standard conditions of sale (fourth edition) stated that the vendor retains the risk to the property. It said that if the property was damaged but habitable, the buyer must proceed but can deduct cost of repair. If the property was uninhabitable the buyer could choose not to proceed. The new fifth edition has completely changed that and now the buyer is responsible for risk from date of exchange. I wonder why they changed it then.

Bossworld

Just taken out insurance through More Than's website, will probably need to call them up to do the lender's interest thing. Only came to about £14 a month which was cheaper than I was paying with HBOS for contents only.

Bossworld

Back to this, it's turning into a bit of a mess.

We sent the money to the conveyancor/solicitor last week, they banked the cheque on Friday according to online banking. They've emailed today (Tuesday) asking for the house to be 'put on risk' from tomorrow and a copy of the house insurance to urgently forwarded so they can exchange contracts ASAP.

They've asked for a copy to be sent tomorrow - I'm still waiting for the docs in the post, and I assume there'll be another delay on top of that for the modified one that states the mortgagee's interest (this was asked for on 28/02).

The real problem is that the insurer is unwilling/unable to change the start date without cancelling the policy. This means I lose out on £50 quidco, and then perhaps another 10 day wait for documents. I've acted on the advice here (my own risk admittedly) and the solicitor asking for insurance details to be forwarded, but the policy started yesterday. What are the legal ramifications of this (if any, given that it appears to be a grey area)

Thanks

kingstreet

Starting the policy early simply means you run the risk of losing money if exchange doesn't go ahead. To be fair, you weren't advised to start the cover now. It was suggested you apply, hold cover until exchange, ask the insurer to note the lender's interest and have details of the pending cover faxed to the solicitor in advance of exchange.

As the cover is in force and you have now had the lender's interest noted, call the insurer and ask them to fax details of the cover to the solicitor so exchange can now take place.

Bossworld

kingstreet wrote: »

Starting the policy early simply means you run the risk of losing money if exchange doesn't go ahead. To be fair, you weren't advised to start the cover now. It was suggested you apply, hold cover until exchange, ask the insurer to note the lender's interest and have details of the pending cover faxed to the solicitor in advance of exchange.

As the cover is in force and you have now had the lender's interest noted, call the insurer and ask them to fax details of the cover to the solicitor so exchange can now take place.

Not bothered money wise - like I say the policy was cheap enough and the quidco swung it, but unfortunately there was no option to change anything when purchasing online, for quidco it had to be purchased there and then, and they took 24 hours to be able to view the policy details over the phone, at which point I found out that I couldn't amend the date.

Like I say, hands up it's my own doing, I just need to know I'm not doing anything fraudulent. Have e-mailed the conveyancer again, More Than did state that they're welcome to ring them - whether they'll do it or not I'm not sure.

kingstreet

Bossworld wrote: »

Not bothered money wise - like I say the policy was cheap enough and the quidco swung it, but unfortunately there was no option to change anything when purchasing online, for quidco it had to be purchased there and then, and they took 24 hours to be able to view the policy details over the phone, at which point I found out that I couldn't amend the date.

Like I say, hands up it's my own doing, I just need to know I'm not doing anything fraudulent. Have e-mailed the conveyancer again, More Than did state that they're welcome to ring them - whether they'll do it or not I'm not sure.

The way comparison sites and cashbacks work isn't really suited to the way insurance is done during the homebuying process.

I would say the chances of a solicitor ringing an insurer are slim and none. If the insurer won't fax details to the solicitor, you're going to have to wait until the paper copy arrives and do it yourself.