When Should I Be Putting My Buildings Insurance In Place On The Property I Am Purchasing?
Posted on 24th June 2020
What relevance does buildings insurance have?
When purchasing a property, there can be a million, and one, things to consider. Our team understand that it can be easy to forget the important things, amidst choosing furniture and colour schemes. So, our property conveyancing solicitors have devised a trusty checklist, that you can use, as a one-stop-shop, of things to consider within your property purchase. See for yourself, here.
Just one of these important items looks to buildings insurance over the property. Buildings insurance is in place to cover a range of eventualities, which may adversely affect the property. These can include the following, as examples:
- Fire;
- Subsidence;
- Storm damage;
- Fallen trees/lampposts;
- Vandalism;
- Natural disasters.
The insurance is incepted in order that, should an issue arise, the costs of remedying the same are covered by the insurance policy, and are usually affected up to the full cost of rebuilding the same.
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So, when should you be putting your buildings insurance in place?
As a property purchaser, your buildings insurance should be effective from the point of Exchange of Contracts. Exchange of Contracts makes the transaction legally binding, and is also known as ‘the point of no return’. This, effectively, means that you will be legally bound to purchase the property, on the agreed date, once Exchange has taken place.
For more on Exchange of Contracts, and the importance of this stage in your conveyance, see our Preston solicitors’ blog, here.
It is, therefore, important to ensure all necessary due diligence has been completed before this point, and this should extend to your buildings insurance. Although the policy needs to be placed ‘on risk’ as of the date of Exchange of Contracts, our property conveyancing solicitors would not advise leaving this as a last-minute matter to deal with.
When should I start looking at arranging buildings insurance?
There are a number of reasons why you should begin looking at options in terms of buildings insurance sooner, rather than later. These include the following:
- Mortgage lender requirements: As part of your formal Mortgage Offer from your lender, there will be a requirement that you take out buildings insurance, to the full reinstatement value of the property. This is in order that, should an issue arise, the property is covered to its full cost of rebuilding. This will be a condition of the Mortgage, and the lender can reserve the right to withdraw the Offer if this is not adhered to. For further circumstances in which a Mortgage Offer can be withdrawn, see our blog. The Offer will, usually, offer insurance by the lender’s selected provider, however, there is no legal requirement to proceed with those elected. So, do your research, get some quotes and look for the best policy for you, and your property.
- Search results: The search results provide extremely important information, pertaining to your property purchase. The matters covered therein can be viewed, here. Where, however, the search results reveal certain issues, the insurance you may be able obtain may be limited. It would, therefore, be wise to review your search results, and the advice of your property expert, and begin obtaining insurance quotes at such stage. This would help ensure that there will be no nasty surprises, when it comes to arranging for the same to be incepted. As discussed above, this can also affect your mortgage lender. Your property conveyancing solicitor has a duty to report adverse issues to your mortgage lender, and this can include adverse search results. In instances where such matters have been disclosed, the lender will require evidence that insurance can be obtained on standard terms. Again, reinforcing the need to ensure that such matters are dealt with sooner, rather than later.
- Fees: As with everything, buildings insurance does come at a price. So, it would be prudent to obtain various quotes, to ensure that you are obtaining a reasonable deal, on the terms that you require. If this matter is left to a last-minute panic of arranging, you may find yourself with an increased premium that may be avoided if looked into diligently.
- Protocol Forms: A further indicator relates to the information portrayed within the Property Information Form, also known as the TA6. The Property Information Form provides various important pieces of information about the property you are purchasing. There is, in addition, a specific section which relates to the insuring of the property. At Section 6, the Form asks the seller to confirm in respect of the following:
(a) Whether they insure the property.
(b) Whether the insurance over the property has been subject to unusual conditions, high excesses, refused or any abnormal rise in premiums.
(c) Whether any buildings insurance claims have ever been made.
As you can see, this provides important information pertaining to the previous/current insurance, and whether there have been any such issues. Where such issues have been revealed, your property conveyancing solicitor can raise the necessary conveyancing enquiries, to determine why the insurance has been affected, and, indeed, how this may affect you, as the new owner of the property, upon Completion.
For more on the Protocol Forms, and the information that they provide, see our blog.
- Leasehold properties: If you are purchasing a leasehold property, which has the involvement of managing agents, insurance may come part-and-parcel of your Lease agreement. The Lease can, in some cases, stipulate that the property is not to be insured for purposes that are already covered by the managing agents. This is worth noting, as it could save you money; your property conveyancing solicitor will be able to confirm the arrangements in this regard. In addition, proceeding with insuring the property could find you in breach of the Lease, dependent on the stipulations made therein, making this a, particularly, important item to consider. For more information, and all things leasehold properties, see our blog, here.
As you can see, there is more than initially meets the eye with buildings insurance. It is, therefore, important to consider the above, very carefully. So, do not become unduly concerned, and take the advice of MG Legal’s property experts. Whilst we cannot choose the right product for you, we can point you in the right direction of what is required. So, get in touch today, at property@mglegal.co.uk.
Alternatively, if you have any other conveyancing query, submit an online enquiry today, here, where our local solicitors will be on hand to assist.
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