Insurance at exchange problems

carolineb23

Hi, I would be very appreciative of any advice anyone can give me as we don't appear to be able to get a straight answer from our mortgage company or solicitor! We have only ever exchanged and completed on the same day before so this issue has never come up but our mortgage company is telling us we absolutely must have insurance in place on the day of exchange. We are due to exchange at some point next week and we are completing on 27th September. I am very concerned that by starting our insurance next week when we exchange if something were to happen between the time of exchange and completion that there will be 2 insurance policies running concurrently (ours and the present owners). I have heard of situations where an insurer will not pay out when there is another policy on the same property so how can it be true that we need to have our own insurance in place for exchange?
We have spoken to our lender and reiterated that the property will be insured between exchange and completion but just not by us. They have categorically told us we must have our own policy in place.
Our current insurer for the property we are selling has a clause in their ts&cs to say that the new owner is covered inbetween exchange and completion, however according to our lender, even if our vendors have the same clause in their current insurance policy, that wouldn't be acceptable.
I'm completely at a loss as to how this can work!

Senior_Paper_Monitor

Your insurance in place at time of exchange - end of !!

The potential for overlap exists and is fully recognised and normally any major claim (like it burning down) is split between the insurers.

As you have no control over the validity/continuance of the vendor's insurance this is absolutely standard.

You are confusing 'double insuring' which is one person insuring the same risk with two separate insurers thereby looking to make a profit on the incident (which is not acceptable to the insurance industry) with two parties having an insurable interest on the same risk.

kingstreet

It's normal.

The current version (five) of the standard conditions of sale sees the purchaser accept risk between exchange and completion.

Therefore cover is required from that point. Broker insurers, such as Paymentshield, Select & Protect and The Source have no problem accepting an application, preparing it for risk and faxing an intention letter to the solicitor ready for exchange.

The policy can then be started from that date and confirmation of cover faxed to the solicitor.

As you would be required to honour your contract at completion, even if the property is a smouldering heap of embers, it is essential cover commences from exchange.

amnblog

'ditto'

I cannot see why you are arguing about this - has your solicitor not put you straight?

carolineb23

Thanks for the clarification.
I am not arguing anything anmblog, simply trying to understand it as I have been made aware of problems where one insurer refused to pay out as the property was also insured with someone else.
Our solicitor actually told us to get the insurance in place for completion when I questioned it, hence my confusion.

HappyMJ

If the house burns down between exchange and completion you still must complete or risk losing the deposit. The insurance on yor side will cover your deposit so you don't have to complete....and besides your mortgage company won't release the money to enable completion if there is no house any more.

You can usually take the insurance from the mortgage provider setting up a direct debit to pay it which will cover you for 14 days from exchange to completion then once you have completed the purchase you can just cancel it and find a better policy.