Buying house - insurance "on risk"

TheCyclingProgrammer

Sorry if this is a silly question, but we are in the process of buying our first house and we have been told we need to have buildings insurance in place on exchange.

I've already got a quote I am happy with from John Lewis - not the cheapest available but I'm trying to get a good balance of cost and good reviews.

We don't yet have an exchange date, but when I do is it just a case of buying the insurance to start on that date?

My solicitor mentioned something about putting it "on risk" from exchange but I don't really understand what that means.

I just had a follow up call from John Lewis so I asked them and the lady I spoke to hasn't heard of that term either.

What is the correct way to go about arranging this?

nidO

You need buildings insurance from the date you exchange, you should therefore simply ask John Lewis to start your policy on the date you exchange contracts, once you actually have that date.

No-one really knows why this is other than "because you need to", and i've never seen an explanation anywhere that makes any sense. The usual line is "once you've committed to buy the property you'd still have to buy it even if it burnt down" except when exchanging contracts you are committing to buying the property in the condition that it is in on the date you exchange, and under no stretch of the imagination is a pile of smouldering rubble the same thing as an intact house.

sithemadmonkey

"On risk" just means "insured" - the risk referred to is the insurer's risk of paying out if you claim.

Hope that clarifies a bit.

kingstreet

FWIW the standard conditions of sale used by the vendor's solicitor determines who accepts risk from exchange.

IIRC Version 4 is vendor and Version 5 is purchaser.

For as long as I can remember, brokers have been able to submit an application with the commencement date as TBA. When exchange is imminent, the cover can then be "put on risk" from that date and confirmation of cover and adherence to CML 6.14.2 requirements provided to the solicitor, where there's a mortgage involved.

It's only the internet-based fast-turnover insurers who have to have an application, start date and payment all on the same day.