New build - Insurance between exchange & completion

dumpallhere

Is this something different than normal requiring specialist insurance?

Though it is a new build with completion expected near to year end only, we have been told that the insurance will be our responsibility from exchange onwards. Our brilliant solicitor says he cannot get the clause changed to make seller responsible until completion!

So, will the usual insurance products cover this? Or is it that I have to find a specialist product? I was looking at the MSE comparison website for quotes and one of the question asked for quotes was about unoccupation. Well, the property is going to be unoccupied for some months and depending on how things progress could be 3-6 months. So wondered if these products aren't what I need but something else??

kingstreet

Are you sure the builder is not retaining the risk between exchange and completion?

It's very unusual if that's the case.

A "normal" purchase, the risk is accepted by the party determined by which version of the standard selling conditions are being used, but newbuild is normally the builder.

Have you asked the builder about it? It may be possible the builder's solicitor has used the wrong draft contract.

We look after three builders and not one expects the purchaser to insure the building during the course of construction.

Fortheloveofmoney

We bought a new build last year and didn't have to get insurance between exchange and completion. In fact depending of the stage of your build, I would be surprised if this was even possible.

Unlike buying a non new build from a vendor, the builder would usually insure the risk.

dumpallhere

kingstreet wrote: »

It may be possible the builder's solicitor has used the wrong draft contract.

To a sane mind, that would appear to be the only possibility.

Fortheloveofmoney wrote: »

In fact depending of the stage of your build, I would be surprised if this was even possible.

My thoughts exactly. I can't imagine how I am supposed to insure a house that is not a self-build and has not even been completely constructed.

My solicitor!! :eek::mad::mad:

Mickygg

When I bought a new build the insurance was at the expense of the developer until completion. I exchanged then didn't complete until 6 months later so just as well!

NewbuyerNE

Normal insurance products wouldn't cover it. One if the insurance principles a customer must have is insurable interest (meaning you own it completely) to make cover valid - so most will only cover upon completion.

Also you're right about the unoccupancy (someone checking on it during the day doesn't count). So if you're not living there for over 60 days, cover is invalid and could backfire either with your mortgage application if its one of the stipulations, or if there's a fire etc.

Source: me! Insurance advisor for 8 years until 1 month ago

kingstreet

NewbuyerNE wrote: »

One if the insurance principles a customer must have is insurable interest (meaning you own it completely

There is sufficient insurable interest in having to honour a contract on the agreed completion date, hence on a non-newbuild it is normal for the buyer to accept risk and insure the property from exchange.

Legal obligation to sell/purchase begins at exchange.

It is the different versions of the Standard Selling Conditions (either version four or version five) which determine who will accept the risk between exchange and completion.

As noted earlier, it is usual for the builder to retain the risk on a newbuild.

kingstreet

Further info from a quick online search;-

http://www.practicalconveyancing.co.uk/content/view/9561/1242/

Where risk passes to the buyer on exchange of contracts, he would be well advised to insure the property from exchange, since otherwise he will have to fund any accidental damage to the property out of his own pocket

http://www.jonnylawonline.co.uk/faqs/what-happens-at-exchange-of-contracts/

When contracts are exchanged for the sale and purchase of property, the beneficial interest passes to the buyer. On exchange, a buyer will normally pay a deposit. Once contracts are exchanged, the buyer has an insurable interest in the property.

NewbuyerNE

kingstreet wrote: »

Further info from a quick online search;-

http://www.practicalconveyancing.co.uk/content/view/9561/1242/



http://www.jonnylawonline.co.uk/faqs/what-happens-at-exchange-of-contracts/

Doesn't change the fact most insurers won't cover until completion. They don't have exceptions depending on the build.

Most won't cover if there's building works over £20,000 in progress or if noones living there.

I believe that answers the OP's original question.

kingstreet

Quite.

However, it's worth considering new members carrying out a search for similar issues and a full explanation can reduce confusion and doubt.

FWIW I've been insuring property from exchange with companies such as Paymentshield (Royal & Sun Alliance, Groupama) Select & Protect (LLoyds, Allianz, Aviva, Zurich) Towergate (Equity Red Star, Ageas, Towergate) for a number of years and never had a problem with commencing buildings insurance from exchange and contents cover from completion.

The issue of starting cover from exchange seems to only exist around insurers using aggregators where the "low-hanging fruit" approach appears to persist.

Unoccupied cover is, of course, a different matter again, with specialist firms offering terms based on security and length of vacancy.

NewbuyerNE

Rather.

I see two underwriters on your list there that Tesco have on their panel.

Tesco don't cover until completion.