Does Home buyer protection insurance cover if my buyer pulls out?

jandspace

I am wondering if Home buyer protection insurance normally covers the case that if a chain buyer who is buying my house pulls out for whatever reason (i.e, the buyer changes mind or the buyer fails the mortgage offer) and it causes the failure of my purchase.
I sold my property (SoldSTC) and I got my offer accepted to purchase a new property. 4 months later, my buyer pulled out because he had failed to get mortgage due to his financial problem. The vendor of my purchasing property doesn't want to wait and want to remarket immediately. So my offer was withdrawn by the vendor because I wasn't in the position of purchase, even though it was not my fault. I claimed it but the insurance company declined to pay for compensation. 
So I am wondering if Home buyer protection insurance doesn't cover this event at all. Please advise me.

davidmcn

jandspace said:

I claimed it but the insurance company declined to pay for compensation. 
So I am wondering if Home buyer protection insurance doesn't cover this event at all. Please advise me.

Please show us the terms of your policy, and we'll tell you.

jandspace

Hi @davidmcn
Thank you. The company is Surewise and they quoted the exclusion saying that

• "Incurred as a result of deliberate behaviour by You that results in the Vendor withdrawing the Property from sale. Such behaviour will not include normal communication involved in a Purchase. An example of behaviour causing the Vendor to withdraw is seeking a reduction in the agreed sale price beyond what can be justified by the results of a survey or information emerging from the conveyancing or search process." (https://prnt.sc/10ivhxb)

Also they said on the email that

• "We will not be liable for any costs and expenses: Incurred as a result of deliberate behaviour by You that results in the Vendor withdrawing the Property from sale."

I wonder if my case is an exception. I think this case (Unable to proceed due to a chain buyer's pulling out) could frequently happens. So I wonder why the insurance companied don't consider to cover.

Unfortunately the policy period was expired while I was trying to discuss with them. However, I am purchasing another property and would like to buy Home Buyer Protection Insurance that covers above case. Do you happen to know if there is any insurance company covers the case?

Many thanks.

eddddy

jandspace said:

I wonder if my case is an exception. I think this case (Unable to proceed due to a chain buyer's pulling out) could frequently happens. So I wonder why the insurance companied don't consider to cover.

I suspect they don't  cover it specifically because it frequently happens - and they wouldn't make any money if they did.

As a general comment about Homebuyer Protection Insurance - but not about the company you mention (for the benefit of the lawyers!!!)... 

Many people seem unimpressed with this type of insurance. It seems to cover very specific circumstances that don't arise very often, and even when those circumstances do arise, people complain that the insurers push back.



As an aside, I guess it would be great if somebody from Surewise could explain why they feel it's not misleading to mention on their website that:

A recent Which? study* found that around 30% of property purchases fall through, resulting in an average cost of £2899 to each homebuyer.
link: https://www.surewise.com/home-buyers-insurance/

Would a reasonable person think that means they pay out on 30% of policies?

But if they provide £2175 of cover of £220, they can't be paying out on 30% of policies.
It would be interesting to know what percentage of policies they really do pay out on.

davidmcn

jandspace said:

Hi @davidmcn
Thank you. The company is Surewise and they quoted the exclusion saying that

• "Incurred as a result of deliberate behaviour by You that results in the Vendor withdrawing the Property from sale. Such behaviour will not include normal communication involved in a Purchase. An example of behaviour causing the Vendor to withdraw is seeking a reduction in the agreed sale price beyond what can be justified by the results of a survey or information emerging from the conveyancing or search process." (https://prnt.sc/10ivhxb)

Also they said on the email that

• "We will not be liable for any costs and expenses: Incurred as a result of deliberate behaviour by You that results in the Vendor withdrawing the Property from sale."

I wonder if my case is an exception. I think this case (Unable to proceed due to a chain buyer's pulling out) could frequently happens. So I wonder why the insurance companied don't consider to cover.

Unfortunately the policy period was expired while I was trying to discuss with them. However, I am purchasing another property and would like to buy Home Buyer Protection Insurance that covers above case. Do you happen to know if there is any insurance company covers the case?

I can't see those exclusions being relevant. Here's the policy wording: https://www.surewise.com/downloads/gdpr/Home-Buyers-PW-010221-v1.pdf

It includes in the insured risks:

The purchase of the property failing due to any of the following occurring during the period of insurance: 1) The property is withdrawn from sale by the vendor due to reasons beyond your control and you cannot proceed with the purchase.

which appears to cover your scenario.

eddddy

davidmcn said:

It includes in the insured risks:

The purchase of the property failing due to any of the following occurring during the period of insurance: 1) The property is withdrawn from sale by the vendor due to reasons beyond your control and you cannot proceed with the purchase.

which appears to cover your scenario.

FWIW, another insurer who had some almost identical wording in their policy (may or may not be connected?) apparently refused a similar claim on the basis that...

The vendor had not withdrawn the property from sale - it was still 'available for sale'. The vendor had simply decided not to sell to that specific buyer.

Here's the relevant Trustpilot review (but just to emphasize this is a different insurer, who seems to use some almost identical wording in their policy) ...

READ THIS BEFORE PURCHASING HOMEBUYERS INSURANCE
Firstly you need to be aware that upon taking out a policy (and before the opportunity to claim) HomeLyfe are paying customers £10 to submit a review, hence the high rating on trustpilot. The policy wording is very clever, we took out the policy in good faith based on the marketing and policy document. This insurance has a massive and well hidden exclusion, you are only covered if your vendor withdraws the property from the market entirely, not if they just withdraw from your purchase. This policy offers virtually no protection against realistic scenarios you will encouter during a house purchase.
Link: https://uk.trustpilot.com/review/homelyfe.com?stars=1

greatcrested

Have I misunderstood?

OP seems to be the seller, not the buyer.

davidmcn

eddddy said:

davidmcn said:

It includes in the insured risks:

The purchase of the property failing due to any of the following occurring during the period of insurance: 1) The property is withdrawn from sale by the vendor due to reasons beyond your control and you cannot proceed with the purchase.

which appears to cover your scenario.

FWIW, another insurer who had some almost identical wording in their policy (may or may not be connected?) apparently refused a similar claim on the basis that...

The vendor had not withdrawn the property from sale - it was still 'available for sale'. The vendor had simply decided not to sell to that specific buyer.

Here's the relevant Trustpilot review (but just to emphasize this is a different insurer, who seems to use some almost identical wording in their policy) ...

READ THIS BEFORE PURCHASING HOMEBUYERS INSURANCE
Firstly you need to be aware that upon taking out a policy (and before the opportunity to claim) HomeLyfe are paying customers £10 to submit a review, hence the high rating on trustpilot. The policy wording is very clever, we took out the policy in good faith based on the marketing and policy document. This insurance has a massive and well hidden exclusion, you are only covered if your vendor withdraws the property from the market entirely, not if they just withdraw from your purchase. This policy offers virtually no protection against realistic scenarios you will encouter during a house purchase.
Link: https://uk.trustpilot.com/review/homelyfe.com?stars=1

Hmmph. I think that would be worth challenging - what's the relevance of it still being on the market, surely what's relevant is whether the vendor has withdrawn from selling to you?

Thrugelmir

davidmcn said:

jandspace said:

Hi @davidmcn
Thank you. The company is Surewise and they quoted the exclusion saying that

• "Incurred as a result of deliberate behaviour by You that results in the Vendor withdrawing the Property from sale. Such behaviour will not include normal communication involved in a Purchase. An example of behaviour causing the Vendor to withdraw is seeking a reduction in the agreed sale price beyond what can be justified by the results of a survey or information emerging from the conveyancing or search process." (https://prnt.sc/10ivhxb)

Also they said on the email that

• "We will not be liable for any costs and expenses: Incurred as a result of deliberate behaviour by You that results in the Vendor withdrawing the Property from sale."

I wonder if my case is an exception. I think this case (Unable to proceed due to a chain buyer's pulling out) could frequently happens. So I wonder why the insurance companied don't consider to cover.

Unfortunately the policy period was expired while I was trying to discuss with them. However, I am purchasing another property and would like to buy Home Buyer Protection Insurance that covers above case. Do you happen to know if there is any insurance company covers the case?

It includes in the insured risks:

The purchase of the property failing due to any of the following occurring during the period of insurance: 1) The property is withdrawn from sale by the vendor due to reasons beyond your control and you cannot proceed with the purchase.

which appears to cover your scenario.

The property hasn't been withdrawn from sale. It's still on the market. Nor is the OP in a position to proceed with the purchase currently. The offer made is now dependent on finding another buyer for their property first. 

davidmcn

I agree though that (as previously discussed here) these policies are pretty poor value and very restricted in scope (e.g. out of all the things which might crop up in searches, the only thing they've covered is compulsory purchases - which sounds scary but is probably one of the least likely surprises to appear in search results).

eddddy

I guess there's always the option to make a formal complaint to the insurer, followed by the Financial Ombudsman, if you think that your claim has been unfairly rejected.

https://secure.surewise.com/help/faq/surewise/how-do-i-log-a-complaint-with-surewise