Insurance 'on risk'

Velvet_Glove

Just had an email from my solicitor saying "If you are arranging your own buildings insurance please have this on risk from exchange of contracts." When would best to organise this? I had a look on Comparethemarket tonight, but it won't let you select date more than 30 days into the future, and I'm not that optimistic! I guess I'm also asking what 'on risk' means.

G_M

'On risk' is the date the insurance starts.

As you approach Exchange, do your research and get quotes. Decide which insurer you want to use.

As soon as you have the Exchange date (probobly you'll only know for sure the day before or on the day) take out the policy from that date.

You cannot start the policy ahead of time as there are so many reasons why the Exchange date might be delayed or, indeed, never happen.

FireWyrm

Legally, when exchange happens, you own the house and are obligated to complete the purchase regardless of the state of the property. Essentially, you have to take out buildings insurance from the day of exchange to insure yourself against loss of the property from that point forward because even if it's a smoking ruin, it's yours.

That's all he's saying.

You'll know way ahead of time the actual date of exchange, he's just warning you that you need to have the insurance in place. Diarise it and make sure you do it just as instructed.

Velvet_Glove

Re-reading our surveys and checks when trying to find out what the roof is made out of...I have realised that we only need contents insurance as the council look after the buildings side of thing (it's an ex-council flat). Oops. Thank you for all your help anyway!

G_M

The principle is right but

FireWyrm wrote: »

Legally, when exchange happens, you don't own the house and but are obligated to complete the purchase regardless of the state of the property. Essentially, you have to take out buildings insurance from the day of exchange to insure yourself against loss of the property from that point forward because even if it's a smoking ruin, it's yours.

Additionally, legally the vendor has an obligation to hand over the property to the buyer in the same condition as it was at Exchange, so if it was a smoking ruin the buyer could sue.

Not much help of course if the seller has no cash to pay!

It also depends which version of the Standard Conditions of Sale is used. In one version, the seller is specified as expected to insure, in another, the buyer.