Do I need short-term buildings insurance between exchange and completion?

Did you know that from the moment contracts are exchanged you’re legally responsible for insuring your new property? It’s an unusual situation because ownership isn’t legally transferred to you until the completion date. So do you need short-term buildings insurance to cover the period between exchange and completion? The answer depends on whether you’re already a homeowner or you’re a first-time buyer.

What are my obligations as a buyer?

The standard Conditions of Sale in use in England and Wales states that the responsibility for insuring a property passes from the seller to the buyer once contracts are exchanged. The seller is under no obligation to maintain their current insurance and a buyer’s solicitor may refuse to continue to act until buildings insurance is in place.

What are my obligations as a seller?

Sometimes the contracts can be amended so that the obligation to insure the building rests with the seller. A seller may also have to maintain insurance if a leasehold or tenancy agreement is in place that means they’ve agreed to insure the building under a separate contract.

How long is short-term cover?

Completion can be as fast as two weeks from the exchange of contracts but can stretch to several months. Even though you’ve agreed a completion date, this may be subject to complications and delays. Look for a policy that is flexible enough to take account of any hold-ups in the completion process.

Do you currently have buildings insurance?

If the answer is yes, then contact your insurance company to transfer the cover to your new property. Let your insurers know well in advance of the exchange date so they can arrange for seamless cover and always check that your existing home remains covered during the time from exchange to completion.

Is this your first home?

If this is your first property purchase and you don’t have existing cover in place, you’ll need to arrange short-term buildings insurance. It’s often cheaper to take out a combined contents and buildings insurance so shop around for good value quotes but never leave your possessions or your property underinsured.

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