The difficulties of obtaining buildings insurance from exchange

If you’re purchasing a new property with a mortgage, it is vital you take out buildings insurance, as without it, you will foot the bill if damage occurs in the home, on top of paying the mortgage. But when should the home insurance start, from exchange or completion?

‘Exchange’ refers to the exchange of contracts between the buyer and the seller, which makes the purchase legally binding. ‘Completion’ is the date that the buyers physically move into the property and have legal ownership of it. From the exchange of contracts, the buyer is legally obliged to proceed with the purchase, even if the property becomes damaged before completion.

When buying a property with a mortgage, buildings insurance should be in place from exchange. If it is left until completion, there is no insurance in place to cover the new owner, should a fire or another event that damages the property takes place, as the vendor’s insurance will not cover the new buyer.

However, obtaining insurance from exchange may be difficult due to the fact the new owner will not be occupying the property straight way. During this stage of the purchase, the property may either be unoccupied or still occupied by the vendor.

The time between the exchanging of contracts and physically moving into a property and completing can be notoriously difficult to predict, making the quest to be adequately insured during this period even more difficult.

Not only is the length of the time between exchange to completion difficult to predict, but problems can arise if the new owners are not moving into the property straight away, so it is either left vacant or is still occupied by the previous tenant.

To overcome the issue of obtaining adequate house insurance from exchange, the buyer may be wise to take our non-residential household insurance, which provides cover for properties that are temporarily vacant.

Nelson Policies at Lloyd’s offers non-standard residential cover for properties that can be difficult to place within the insurance market. Our competitively-priced non-standard household insurance covers properties that are temporarily vacant for up to 90 days.

To find out more about our non-standard residential cover, get in touch with Nelson Policies at Lloyd’s friendly team of non-standard residential insurance experts.

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