Home insurance between exchange and completion
In a previous article, we discussed the importance of taking out an insurance policy on the property you are purchasing with effect from the exchange of contracts. However, obtaining buildings insurance between exchange and completion can be difficult. Here, we look at the available options for insuring a property between exchange and completion of the purchase contract.
Insuring a property prior to completion – Why insurers sometimes don’t seem very helpful
We regularly hear from customers who have asked their existing insurer for a quotation for buildings insurance on a property they are purchasing where contracts are about to be exchanged, but completion is not scheduled for some time. Their insurance company have been reluctant to assist, as they do not like the fact that before contracts have been completed, the purchaser has no control over the building, how it is looked after and who is staying there. Therefore a standard household insurer is being asked to cover a property which may be occupied by people other than the policyholder, or may even be unoccupied. Their policy wordings are simply not designed for this situation and they do not like the lack of control the policyholder has over the risk, so the easy answer is ‘Sorry, No’.
Insurance for a property being lived in by the vendor prior to completion
Often, contracts can be exchanged with a completion date set several months in the future. This is common when a maturing investment is needed to fund the purchase, or if the vendor is moving away for work or placement on a pre-arranged date.
A policy covering the building in the name of the purchaser can still be obtained. Although a household insurer is likely to decline to quote, an insurer with a little more flexibility in their product should be able to help. A solution would be for the insurer to place cover for the building prior to completion on the basis of a landlords policy, which can accommodate the fact that it is occupied by the vendors. Upon completion of contracts, it can then be replaced with the more standard home owners policy.
Insurance for a property which will be unoccupied prior to completion
It may be that the property being purchased is already unoccupied and works on the property will commence once the contract has completed. Here, you need to ensure that you negotiate with the vendors or their agent to ensure that the property is going to be looked after during the insured period before completion. Make sure that you get the agent to take responsibility (by virtue of a written obligation) to inspect the property regularly and ensure that the terms of your unoccupied property insurance policy are being met.
These commonly include:
Regular inspections – at least once every 7 / 14 / 30 days depending on the policy
Water and heating – Either water off and drained, or heating on 24/7 at a temperature specified in your policy.
Security – Most policies have security requirements
The good news – We can help
At Bickers Insurance, we have the flexibility to provide cover on whatever basis it is needed even for a short period. We can then convert the policy on completion to the new status, be it owner occupied, let, or unoccupied with works being done. This means that you don’t need to pay huge penalties for cancelling a short term insurance policy, as we will give a fair and proportionate refund back against the premium to reflect that we are continuing to insure the property for the rest of the year.
Give us a call and explain what you need – We can tailor our cover to fit.