At exchange or completion – when should I arrange high-value home insurance?
When purchasing a home with an above-average market value, securing high-value home insurance should be a top priority. However, it begs the question: when is the best time to complete this task?
Securing high-quality home insurance during the home-buying process can safeguard your new property from potential unforeseen events between exchange and completion.
In regards to purchasing a house, this article discusses the appropriate timing for obtaining home insurance. Is it best to secure it during the exchange or completion process?
When should one consider purchasing high-value home insurance in the process of buying a house?
You may have asked yourself when the appropriate time is to obtain home insurance while buying a house. The best time to secure high-value coverage is prior to exchanging contracts, at which point the sale becomes legally binding.
It is not advisable to wait until after you have moved in. Once the exchange has taken place, you are now legally obligated to proceed with the purchase and hold responsibility for any potential issues that may arise.
Additionally, it’s wise to begin searching for home insurance after the seller accepts your offer on the property.
This allows ample opportunity to assess and evaluate various policies before selecting the one that meets your specific requirements.
It’s important to designate a policy start date to guarantee coverage from day one, avoiding potential complications or delays in the home purchase process and securing approval for your mortgage.
Frequently asked questions regarding home insurance and its necessary timing.
As your solicitor or conveyancer manages the necessary legal documents and agreements for purchasing a home, it is typically the buyer’s responsibility to take care of home insurance.
Is it a legal requirement?
While high-value home insurance is not a legal obligation, most lenders typically demand that adequate insurance be obtained when purchasing a home as part of their terms for the sale.
While a mortgage may not be necessary, it is highly recommended to invest in home insurance. This ensures coverage for any potential costs associated with repairing or rebuilding your home, such as debris removal and professional fees.
Providing proof of insurance may also be required by your solicitor during the conveyancing process, as per the Law Society’s Standard Conditions of Sale (fifth edition). It is important for property purchasers to arrange insurance between exchange and completion.
Is it necessary prior to my mortgage approval?
Generally, it is not required to have high-value home insurance prior to receiving a mortgage offer. However, it is common for lenders to request proof of appropriate insurance during their final checks before issuing the offer.
Thus, it is advisable to secure a confirmed quote beforehand, in preparation for exchanging contracts.
Is it possible to transfer my current insurance coverage?
Due to the variations in size, location, and potential rebuild cost of your new home compared to your previous property, your current policy may not provide sufficient coverage.
Therefore, it is important to consider your options and choose the best one based on your individual circumstances.
Reach out to your current home insurance company and request to include a second address on a temporary basis during the exchange to completion transition, which is typically recommended when there is a substantial time difference between exchanging and completing contracts.
It is important to promptly update your address if you are completing and exchanging on the same day.
Remember to cancel the old insurance policy on the day of completion for your previous address.
Updating an address on your current policy may require just as much time as searching for a new one.
Therefore, it could be advantageous to browse other options without losing any extra time. Although some premium home insurance plans have a pro-rata cancellation policy, where you only pay for the time you’ve been covered, it’s still important to be aware of any potential fees for canceling before deciding to change providers.
When is the appropriate time to terminate my previous insurance?
After purchasing your new property, be sure to cancel your previous home insurance (if you sold it as part of the move). If you’ve already sold your previous property, there is no need to maintain your old insurance, as it now belongs to someone else.
In short, it is not possible to insure a property in which you have no insurable interest, and it is unnecessary to have the same property insured by two different providers.
It is advisable to hold off on cancelling any policies until all contracts are finalised and you have officially obtained the keys to your new home.
While cancelling a high-value home insurance policy may be a simple process, reversing the cancellation can be complicated.
Who bears responsibility for any damages incurred during the period between exchange and completion?
During the period between exchanging contracts and completing the purchase of a home, the buyer assumes legal ownership of the property.
Unless stated otherwise in the contract, they are typically responsible for any damages or necessary repairs, such as a roof damaged by a storm, a broken window, or a fence blown down.
It is the seller’s responsibility to disclose any damage, but ultimately it is the new buyer who must handle any necessary repairs.
Therefore, it is essential for the buyer to secure high-value home insurance during this period in order to protect against potential problems.
It should be noted that the terms of the agreement between the buyer and seller can affect this, taking into account factors such as delays in the exchange and completion process or the property remaining unoccupied.
It is important to review your legal documents for further information. However, it is still highly advisable for the buyer to secure insurance, as it will serve as an additional protection in case the seller’s insurance does not provide coverage for any reason.
Ensuring insurance prior to the exchange date
Securing your new home with a premium home insurance policy on the day of exchange involves a series of essential measures:
- Collect property data: Obtain comprehensive details regarding your recent residence, including its construction date, building materials, and any prior instances of structural concerns.
- Evaluate your requirements: Take into account the worth of your new residence and any distinctive characteristics, such as premium embellishments, valuable artwork, or antique pieces.
- Choose the perfect broker: A specialist like “High Net Worth Insurance Specialist” can assist in pinpointing the most competitive high-value home insurance options through their vast industry expertise and exclusive access to premier insurance products. Keep in mind that not all policies are equal, which is why we will aid you in comparing coverage limits, exclusions, and any extra perks to find your ideal plan. For more guidance on selecting a broker, view our expert suggestions here.
- Protect your home with insurance: Select the best high-value policy and ensure that it is effective on the exchange date to avoid any gaps in coverage during both exchange and completion.
- Verify with your lender: Your mortgage provider may request evidence of your updated home insurance coverage to ensure it meets their requirements and to complete the mortgage process.
Now that you have a better understanding of when to obtain insurance for your valuable home, “High Net Worth Insurance Specialist” can assist you in obtaining customised coverage as one of the top providers in the UK.
With a focus on individualised insurance solutions, we strive to meet the specific needs and circumstances of our customers. Drawing from our vast expertise in the high-end insurance industry, we can assist you in selecting the ideal policy at the appropriate moment. Get in touch with us now to receive a quote.
High Net Worth Insurance Specialist is a trading name of PiA Commercial Ltd.
