Clients in the course of buying a house are often surprised to be told that they need to insure theirnew property from exchange of contracts – i.e. before they are its legal owners.This is because, once under contract to buy a house they will be obliged to complete their purchase on the contractual completion date regardless of the state of the property.Which could be bad news if there has been a catastrophic house fire between exchange of contracts and the completion date.Could they not rely on the seller’s insurance, I am often asked.Well, how do you know the seller has the property insured?That the property’s insured to its full reinstatement value against all relevant risks?That the seller will be prepared to pursue an insurance claim on the buyer’s behalf? That the temptation of a massive cheque from the insurance company wouldn’t trigger the seller starting a new life in a sunnier climate ?Extreme – but you get the point.
There are cases where it’s not practicable for a buyer to insure from exchange – where there is a long period of time between exchange and completion for example – when this is the case it’s important to make sure that the contract places the seller under an obligation to insure at an agreed level and for agreed risks and if required by the buyer to pursue an insurance claim and hand over the money from it.
With storms, snow and wind forecast for the next week or so, it’s important to make sure that your new home is protected as soon as you’re committed to buy.