Building insurance put on risk

marksmen10

Hi I am in the process of buying and selling and have been advised by our solicitor that we should insure that the building insurance on our new property has been put on risk. What does this actually mean and what do we need to do ? Many thanks Mark.

Keep_pedalling

The new house is put on risk at the point you exchange contracts. You need building insurance in place at that point.

DullGreyGuy

marksmen10 said:

Hi I am in the process of buying and selling and have been advised by our solicitor that we should insure that the building insurance on our new property has been put on risk. What does this actually mean and what do we need to do ? Many thanks Mark.

Put on risk means your insurance policy has started... insurance has a few funny terms like rather than saying a policy has been sold we say its been bound, when the policy starts we say its incepted and if the policy is in force/active we say we are on risk because the risk is now ours not the insureds. 

TELLIT01

Does that mean that at the point of exchange, buildings cover on the present house can/should be cancelled or transferred to the new property?  If so, what would happen in the event of a fire or other damage to the property before completion?

Not meaning to hijack the OPs topic but this seems relevant.

Voyager2002

TELLIT01 said:

Does that mean that at the point of exchange, buildings cover on the present house can/should be cancelled or transferred to the new property?  If so, what would happen in the event of a fire or other damage to the property before completion?

Not meaning to hijack the OPs topic but this seems relevant.

Usually there will be a special insurance policy called "exchange to completion". This is because from the moment of exchange, if there is something like a fire then it is a problem for the buyer, even though it is not their home yet.

You are not hijacking, because this is the insurance that the OP needs.

DullGreyGuy

TELLIT01 said:

Does that mean that at the point of exchange, buildings cover on the present house can/should be cancelled or transferred to the new property?  If so, what would happen in the event of a fire or other damage to the property before completion?

Not meaning to hijack the OPs topic but this seems relevant.

The answer is... its complex.

In principle once exchange has happened the buyer is legally required to complete the sale and so if the house burns to the ground its their problem not yours however its likely you'll find the buyer fails to complete and so you are left to chase them for breach of contract and unless they are a cash buyer they are unlikely to have the means to pay you out

Assuming you still have a mortgage then you will have a contractual obligation to hold appropriate buildings insurance too. 

If the postman was to trip and fall on your dodgy paving slabs you'd still be liable for any injuries they sustained. Similarly you may be taking fixtures and fittings with you and so they would need to continue to be insured under your buildings cover

The majority of people buy combined Buildings and Contents and cancelling just the buildings side isn't always possible. 


In most cases your (as the seller) home insurance is likely to give protection to the buyer, for example the Post Office states:

15. Protection when you sell your home
if you’ve exchanged contracts to sell your home, we’ll give the buyer the benefit of this buildings cover until the sale is completed, unless the buyer has insurance elsewhere.

We’ll also continue to provide cover until the sale goes through as long as completion is not more than 60 days from the date of exchanging contracts (or in Scotland, more than 60 days from the date of what is known as the ‘conclusion of missives’).

It however would be risky for the buyer to rely on the sellers insurance as they may not have any or may cancel it on exchange.

marksmen10

Thanks for the replies, so if I take out insurance on the new property at the time of exchange, do I then cancel my existing property insurance? Ideally I would just like to transfer the insurance, or do I need both in place until moving day. Thanks Mark.

dunstonh

Thanks for the replies, so if I take out insurance on the new property at the time of exchange, do I then cancel my existing property insurance?

No.  if you suffered a loss between now and completion you would not be covered.  You leave the existing one until completion.   Many insurers, if you stay with them, will continue to cover you on both during that interim changeover period.

Ideally I would just like to transfer the insurance, or do I need both in place until moving day.

Notify your existing insurer of your exchange and completion dates.