The Importance of Buildings Insurance During the Conveyancing Process

Buying a property is exciting but there are a few important steps to take in order protect yourself and your property before you even get the keys. One of the most important steps is to arrange buildings insurance at the right time during the conveyancing process.

What is buildings insurance?

Buildings insurance is a type of insurance policy which covers the cost of repairing or rebuilding your property if it is damaged by risks such as fire, flooding, or storms. It usually covers the structure (walls, roof, windows) and any permanent fixtures (like kitchens and bathrooms).

Buildings insurance protects you from financial risk and keeps your purchase on track.

When should I take out buildings insurance?

You need to have buildings insurance in place from the date of exchange of contracts, not completion. This is an important distinction that is often overlooked by buyers.

It is important to put a building insurance policy in place from the point that contracts have been exchanged because under the special conditions of sale, you (the buyer) will be responsible for the property from exchange, even though you have not moved into the property yet.

Who is responsible for insuring the property after exchange?

In most cases, the buyer is responsible for insuring the property from exchange.

However, if you are buying a leasehold property (such as a flat), the freeholder or management company might already have insurance in place. Your solicitor will check this for you and ensure that the building insurance put in place is adequate.

In some circumstances, the contract can be amended to have the Seller continue to insure up to completion.

What happens if I don’t get insurance at exchange?

If the property is damaged between exchange and completion, you would still have to buy the property, even if it is destroyed/uninhabitable. Without insurance, you would be covering any repair costs yourself.

Also, if you are using a mortgage to purchase the property, your lender will usually require buildings insurance to be in place from exchange. If you do not get building insurance in place at the point of exchange of contracts, you will be in breach of your mortgage lender’s conditions.

What is double insurance and why should I avoid it?

Double insuring happens when two policies cover the same thing at the same time – for example, if both you and the seller (or freeholder) have insurance on the building after exchange.

Whilst this is not illegal, it can cause problems if a claim needs to be made. Insurance companies may argue over who should pay, leading to delays or complications.

How can I avoid double insuring the property?

Ask your solicitor whether you would be responsible for the insurance or if it is already covered (e.g. for leasehold flats) and do not assume the seller’s insurance stays in place – it often ends at exchange.

If you obtain a quote in advance, do not forget to let your insurer know when the policy should start (on the exchange date).

Do I need to tell my mortgage lender?

Yes. Most lenders will want to be named on the policy as an interested party, and they will want to see proof that insurance is in place from exchange. Your solicitor will usually handle this with you as long as you send them a copy of the insurance policy, so that they can ensure that the policy you have activated meets your lenders requirements.

How can Pinney Talfourd help?

If you are concerned or you are looking for more information, please contact our Residential Property team who would be happy to assist you throughout every stage of your property purchase.