Temporary insurance between exchange and completion

shortcrust

Lokolo wrote: »

It doesn't matter what happens to the house once exchanged. If it burns down, the buyer still has to purchase at the price they paid and they would have to claim on insurance for the loss.

This is why you need the insurance on exchange, as at this point you are required to complete no matter what.

The mortgage company are the ones that require a property to be insured. If you aren't purchasing with a mortgage you can still exchange and complete without the insurance. Although it would be stupid to do so.

So OP, get buildings insurance now. You’re risking financial ruin by not having it in place.

javixeneize

But I have a contract to buy a property with n rooms. If the house is burnt, this is not what the contract says I am buying

I have taken the insurance to avoid any risk (and assume everybody do the same) but I think the buyer is right to say that the contract has been broken by the seller as he is not selling what was agreed

On top of that, if I purchase a standard building insurance, could the insurer say that they don’t cover the costs as you are not living in the property yet?

kingstreet

javixeneize wrote: »

But I have a contract to buy a property with n rooms. If the house is burnt, this is not what the contract says I am buying

I have taken the insurance to avoid any risk (and assume everybody do the same) but I think the buyer is right to say that the contract has been broken by the seller as he is not selling what was agreed

On top of that, if I purchase a standard building insurance, could the insurer say that they don’t cover the costs as you are not living in the property yet?

On completion day, you have to honour your contract to purchase the property for the agreed consideration. If you don't you will leave yourself open to legal action.

Insurers accept you have an insurable interest from exchange of contracts and will take possession on completion. Occupation only becomes an issue from that point onwards.

hazyjo

As well as having insurance to insure your interest (once you have exchanged), you should check you can actually get insurance before exchanging. This is to ensure the property is insurable as it won't be mortgageable otherwise, creating a whole heap of other problems!

G_M

The contract you have signed and exchanged is almost certainly the Standard conditions of sale (5th edition)

When you read it before signing, you will have noticed it says:

5. RISK, INSURANCE AND OCCUPATION PENDING COMPLETION
5.1.1 The property is at the risk of the buyer from the date of the contract
....................

Margot123

So, would it be wise for vendor to continue with their insurance until completion, or would it be ineffectual if a claim arises?

KiKi

I have always paid for insurance on my current home up to completion, AND bought it for my new home from exchange. Just in case! Not worth the worry, and for a few weeks, £20 or so is nothing.

KiKi

javixeneize wrote: »

But I have a contract to buy a property with n rooms. If the house is burnt, this is not what the contract says I am buying

But you effectively bought at the point of exchange. That's when contracts were exchanged. You just haven't handed over the cash, yet. (In effect - I accept that legally it's not as simple as that!)

I have taken the insurance to avoid any risk (and assume everybody do the same) but I think the buyer is right to say that the contract has been broken by the seller as he is not selling what was agreed

That's because you're seeing 'purchase' as the point of completion where the contracts become valid. Exchange is actually the point those contracts become valid, so it's a commitment to completing. If you don't complete, you are liable for all costs, and if the house burns down, you are still committed to completing, as you've already exchanged contracts.

On top of that, if I purchase a standard building insurance, could the insurer say that they don’t cover the costs as you are not living in the property yet?

Don't worry about that - most standard buildings insurance requirements are that the property isn't unoccupied for more than 30 days at a time. And it won't be, as someone else is staying there.

kingstreet

Margot123 wrote: »

So, would it be wise for vendor to continue with their insurance until completion, or would it be ineffectual if a claim arises?

From earlier;-

Vendor and purchaser will normally have the building insured at the same time and I'd expect the insurers to split any claim/cost between them.

Margot123

KiKi wrote: »

I have always paid for insurance on my current home up to completion, AND bought it for my new home from exchange. Just in case! Not worth the worry, and for a few weeks, £20 or so is nothing.

My exchange is due to coincide with renewing the unoccupied insurance. It could be a few days either way.

Does anyone know of an insurer that will cover for 30 days (or less) at a time. My current one is now insisting on 12 months at a cost of nearly £1k!
That would be a massive amount to pay out for just a few days.