When asked “When should I insure my new property?” most people would say on completion, when they physically have possession of the property, whilst this is a perfectly reasonable assumption this is, in most cases, incorrect.
Under standard conveyancing contracts the risk of the property passes to the Buyer on exchange of contracts. At this point both parties are legally committed to selling or buying the property. The effect of this is that if the property is destroyed or damaged between exchange and completion the buyer would still be required to buy the Property at the full contract price. It is essential therefore that the Buyer appreciates this and ensures that appropriate insurance is in place on or before exchange.
We would also advise that It is would be prudent for any potential buyer of a property to obtain appropriate insurance quotes early on in the transaction to ensure that suitable insurance can be obtained which satisfies their, and if appropriate their mortgage company’s, requirements. This ensures that if any issues in connection with the insurance is encountered the same can be resolved early on in the transaction thereby avoiding any unnecessary delays.W