Ensuring your new property is adequately insured.

Most residential sale and purchase contracts incorporate the Standard Conditions of Sale (5th Edition). Under standard condition 5, the property is at the risk of the Buyer from the date of exchange of contracts. If you are purchasing a property where this standard condition applies and has not been varied in the contract, you must insure the property you intend to purchase before contracts are exchanged.

Here are a few points to note:-

  1. The insurance must cover the rebuild cost of the property. The rebuild cost is likely to be referred to in your mortgage valuation report or your private structural survey/homebuyer’s survey report.
  2. If you are buying the property with a mortgage, your mortgage lender’s interest should be noted on the policy.
  3. The mortgage conditions you receive from your mortgage lender may set out the standard risks which they expect to be covered under the insurance policy and may set out more specific further requirements. (Such as, a requirement that the excess payable on any claim for subsidence, ground heave or landslip under the policy must not exceed £1,000.)
  4. Your solicitor may ask to see a copy of your buildings insurance policy schedule to ensure there is cover in place which meets your mortgage lender’s requirements before contracts are exchanged.
  5. If you are purchasing a leasehold property where buildings insurance is arranged by a landlord or managing agent, your solicitor will request a copy of the buildings insurance policy schedule from the seller’s solicitor and you do not need to take any further action in respect of the buildings insurance however, please note that you will still need to arrange separate contents cover.
  6. If you are purchasing a new build property which has not been fully constructed at the time of exchange, it is likely that the contract will reflect that the risk in the property remains with the seller until legal completion.
  7. If you decide to carry out any extension or substantial renovation works following completion of your purchase, you should inform your insurance company of your plans before commencing work. The works you plan to carry out may invalid your standard buildings insurance cover. Your insurance company may need to amend your existing policy to take into account the intended works and update their records once the works have completed.

If you have any queries regarding any aspect of residential conveyancing, please contact Varsha Varsani on 020 7703 5034 or email vvarsani@meaby.co.uk

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