Home insurance putting on risk exchange of contracts , what does it mean?

topcat007

"You will need to have buildings insurance on risk as soon as we have exchanged contracts. This means that you must contact your insurer to arrange suitable cover in readiness for us exchanging contracts, You must then call your insurer to put the policy on risk as soon as we confirm to you that contracts have been exchanged"

I am really confused as to what i am meant to be doing. Should i have a quote ready and then ring up on the day of exchange to the insurance company and purchase the policy ? Or buy the policy saying it needs to start on a certain date?

any help really appreciated

stator

Yes get a quote before hand then on day of exchange buy the cover. You could just buy the policy before hand and then cancel it if you fail to exchange, but then you might face a cancellation fee, some insurers charge, some don't.

pinkteapot

I've always got quotes beforehand and then rung up as soon as we've exchanged contracts to take out the policy. Get them to email you the cover note or certificate and forward that to your solicitor.

Don't take the policy out before exchange because the seller could pull out and then you've wasted the cost of the policy.

Your solicitor will, on behalf of the mortgage company, want to see proof you have the policy, but they'll go ahead with exchange so long as you tell them you've got the insurance arrangements in hand and the policy details will follow ASAP.

Don't forget to tell the insurer that it's exchange of contracts and you won't be living at the property until X date (completion date). If something happens and you claim and they didn't know you weren't living there, you may not be covered.

InsideInsurance

Once you have exchanged contracts you are legally bound to buy the property. Most would therefore want insurance in case it disappears into a giant sink hole (a) from your perspective as you dont really want to be paying your mortgage payments for a sink hole and (b) from the sellers perspective as the changes are you'd breach the contract and they'd then be stuck with the pain of chasing you for that breach.

In theory its saying you are going to need to do quotes prior to exchange and buy one of the quotes as soon as you do exchange but in practice if anyone is actually going to check/ ask for evidence is another matter

topcat007

Thanks for everyone's responses really appreciated!

Just got off the phone from a few insurance companies and they will not insure "on risk". They will only insure onwards from the exchange date .

So still quite confused!

rs65

topcat007 wrote: »

Thanks for everyone's responses really appreciated!

Just got off the phone from a few insurance companies and they will not insure "on risk". They will only insure onwards from the exchange date .

So still quite confused!

I think you are asking the wrong question and complicating things.

Do as has been suggested and get a quote now and then put the cover in place when exchange takes place.

stator

I think the "on risk" part is just your solicitor using silly wording, they often do that.

System

InsideInsurance wrote: »

(b) from the sellers perspective as the changes are you'd breach the contract and they'd then be stuck with the pain of chasing you for that breach.
r

So for the period from exchange to completion you actually need more than just ordinary insurance covering your own risks - you additionally need cover for possible legal action and costs by the seller in case you break the contract?

Quentin

Clifford_Pope wrote: »

So for the period from exchange to completion you actually need more than just ordinary insurance covering your own risks - you additionally need cover for possible legal action and costs by the seller in case you break the contract?

Once you exchange you are committed. You cannot insure against you changing your mind!

stator

No, you're just taking out normal building insurance.

InsideInsurance

Clifford_Pope wrote: »

So for the period from exchange to completion you actually need more than just ordinary insurance covering your own risks - you additionally need cover for possible legal action and costs by the seller in case you break the contract?

It isnt normal to buy insurance for you being unable to complete the purchase as your probable main reasons for it are mortgage issue, change of mind, relationship breakdown or death

"On Risk" simply means the policy has incepted/ started and so the insurer is covering the risk/ is the one carrying the risk of anything going wrong.