Most people insure their property, house and contents, against loss or damage. Then if there should be any unfortunate loss or damage (insured peril) there is potential for repair, reinstatement or financial settlement.
When buying a house upon exchange of contracts there is a legal liability to complete the purchase, usually, within 28 days of exchange therefore insurance should be taken out covering the buildings against normal perils (storm, flood, fire and accidental damage).
Because after completion the purchaser will wish to have both house and contents insured it is normal to start a new policy of insurance for the building, at the time of exchange, with the contents cover added after completion of the purchase, at the time of moving in.
However, at the time of exchange the vendor of the property also has the building insured. Therefore, in the event of a loss between exchange and completion there is double insurance on the building. This will involve two insurance companies and two claims handlers and two loss adjusters all of which can cause confusion.
Although it is very rare that there is a loss between exchange and completion, it can and has happened.
One way of avoiding this confusion is for the purchaser’s details to be endorsed on the vendor’s policy, subject to the vendor’s agreement, until completion. While the solicitors are sorting out the details of the purchase they may be able to obtain the vendor’s permission for this to be done.
The purchaser does not have to start a new policy until moving in after completion and most insurers will provide an appropriate endorsement if requested.
The purchaser does not have to start a new policy and in the unlikely event of a claim between exchange and completion there is only a single insurer involved.
Do not forget to add contents cover when moving into the property. You insured the building on its own at the point of exchange.
If you were able to have your details added to the vendor’s policy please remember to insure the buildings and contents by the time that you move in.
Do not forget that the sum insured for the buildings may have no relationship to the purchase price. It is only the cost of rebuilding the property, in the event of loss, plus additional costs of site clearance and architect and surveyor fees, local authority requirements etc.