When you are buying a house or a flat you may assume that insurance won’t be needed until you’re moving in. However, from the moment you exchange contracts you are in a binding contract to purchase the property for the agreed price. So if some accident should occur to damage the property before you complete, you will still be bound by contract to complete the purchase and pay the full sum, in spite of any damage. Therefore it is always wise to insure the building from the moment you exchange contracts.
For most property purchases, the law says that the insurance of the property is the responsibility of the buyer from the date of exchange. It is possible that this will vary, so check with your Conveyancer when you will become responsible.
If you are getting a mortgage, your mortgage lender may insist that you insure the property from the day of exchange. You may need to provide your Conveyancer with a copy of the insurance as evidence that this condition has been met.
You will need to let your insurer know that you have not yet completed the purchase of the property to make sure the insurance will be valid should you need to make a claim.
It is possible that you are buying a house that is currently vacant, and if so you must also inform your insurer of this. The premium could be higher to take account of the additional risks posed by vacant properties.
If you are struggling to find suitable insurance cover between exchange and completion you may need to simultaneously exchange and complete your purchase. This basically means exchanging and completing the same day. This may not be possible if you are part of a chain. For most people this is an undesirable option as your completion date is uncertain and arranging removals and related sales and purchases around this could be tricky.
The contents of the property will not belong to you and you won’t be obliged to insure anything that is not included as part of the contract for sale.
The only exception to this may be a leasehold house where the landlord is responsible for insuring the building. This is rare for houses so usually you will need to insure the property from exchange. If the landlord insures the property, the seller is obliged to make sure the insurance is not voided between exchange and completion of the purchase, for example by refusing to pay the premium.
Co-op Legal Services can provide some of the lowest Conveyancing fees available in the UK.