Insurance for completion

Skyhigh

We're hopefully going to exchange contracts and complete soon, so we definitely need to sort out the buildings insurance - by contract.

Can I not just insure it from the completion date?

Our contract says the house must be insurance "on risk on exchange of contracts".

I've googled this and can't find out about this "on risk"....?

Any ideas?


:!:

nelly_2

Whats the problem?

Im sure you just laid out a few grand so a couple of weeks worth of insurance must be negigable by comparrison?

Some things are worth scrimping some things arnt

they wont let you complete without the insurance

WestonDave

You insure from exchange because from exchange you are legally obliged to complete - in other words if it burns down uninsured between exchange and completion you still have to hand over £xk and in return you get a burnt out shell - at least if its insured the insurer will pay for it to be rebuilt, if not that'll be the most expensive bag of charcoal you'll ever buy.

lotto-dreamer

this extract below might help explain - (whether you are on risk or not depends what is stated in your contract under "special conditions". The special conditions usually vary the Standard Conditions applicable to all contracts. On many contracts, only the special conditions are stated. The Standard Conditions are assumed as applicable if not 'varied' in the special conditions).



Insurance (property) [URL="javascript:void window.open('http://www.practicalconveyancing.co.uk/index2.php?option=com_content&task=view&id=9561&Itemid=1242&pop=1&page=0', 'win2', 'status=no,toolbar=no,scrollbars=yes,titlebar=no,menubar=no,resizable=yes,width=640,height=480,directories=no,location=no');"] [/URL]Last Updated January 2007 Where risk passes to the buyer on exchange of contracts, he would be well advised to insure the property from exchange, since otherwise he will have to fund any accidental damage to the property out of his own pocket, subject to:

• Section 47 of the Law of Property Act 1925, which states that where, after exchange, money becomes payable under any policy of insurance maintained by the seller in respect of damage to the property which he has contracted to sell, that money shall be paid to the buyer at completion (or on receipt of the same by the seller, if later) – note that both the Standard Conditions of Sale (Condition 5.1.4) and the Standard Commercial Property Conditions (Condition 7.1.5) exclude Section 47, and that it is subject to any consent of the insurers which may be required and also subject to payment by the buyer of the proportionate part of the insurance premium from exchange;
• the seller’s duty to take reasonable care of the property between exchange and completion .

However, the seller would also be well advised to maintain his insurance of the property between exchange and completion, in case the buyer defaults on his purchase, and the seller is left with a damaged property and no buyer. Accordingly, it is not unusual for both parties to insure the property between exchange and completion, which may give rise to difficulties if the property is damaged or destroyed by an insured risk between exchange and completion, since each insurer will only pay out to each party half the amount insured.


http://www.practicalconveyancing.co.uk/content/view/9561/1242/

Skyhigh

Thanks for the info.

I know I could just insure it from the date of exchange now, but I wasn't sure what the "on risk on exchange" meant exactly, if it was some special type of insurance during the exchange or something.
Also, I wasn't sure if it was possible to insure the house before the exchange/completion...as I technically don't really own it...

lotto-dreamer

Generally speaking, it is better if the Seller takes the risk and carries on insuring the property until completion.

However, for whatever reason your solicitors have accepted the contract condition that you will be "on risk" from exchange. You could query this with with your solicitors and ask why. Remember it is the Seller's solicitors who usually prepare the contract so it is in their client's interests to make the contract as favourable to the seller as possible.

It is not too late to change this if you haven't exchanged yet. The respective solicitors often change things on the contract (by hand) which is perfectly acceptable as long as both solicitors agree and both contracts are identical in content when the exchange takes place.

sillyvixen

this was one of the things that supprised me on exchange of contracts with my purchase.. it never came up untill i got to the exchange papers to sign with my solicitors - i had been told to provide details of insurance and as i had a compleation date had arranged for it to run from then and had an email from the insurance company.. thank goodness for the internet - having signed the forms i was able to sort out the insurance on line and email confirmation to the solicitor in under an hour so exchange could take place at the alloted time! silly rule i know but house buying is a game.