Who is Responsible for House Insurance Between Exchange and Completion?

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Who is Responsible for House Insurance Between Exchange and Completion?
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When a house is sold, there is a period between the exchange of contracts and the sale completion. During this time, it’s essential to ensure that the property has adequate insurance. Whether the seller or buyer is responsible for this can depend on several factors.

In this blog, we’ll take a closer look at what house insurance is, how much time passes between exchange and completion, and who’s responsible for insuring the property. We’ll also dive deeper into some main factors to keep in mind when insuring a house between exchange and completion.

What is house insurance?

Also known as building insurance, house insurance is a policy to protect the physical structure of a home. It offers financial protection for the walls, roof, windows, and other permanent fixtures in the property and pays out if damaged.

A house insurance policy will typically cover the cost of any necessary repairs if the house sustains damage through theft, fire, flooding, or other events.

How long might there be between exchange and completion?

The exchange of contracts is when the two solicitors representing the seller and buyer exchange signed contracts. The buyer will pay their deposit on this date, and the agreement to buy or sell the property becomes legally binding.

The buyer’s deposit and mortgage are transferred to the seller on the completion date. The money is electronically transferred between the solicitors. Once the transfer is complete, the buyer can collect the keys to their new property and move in.

The gap between exchange and completion can vary depending on several potential factors. The complexity of the sale and the speed at which all parties involved can complete the necessary steps will both have a role to play.

On average, most buyers and sellers wait for around two to four weeks for completion after the exchange of contracts is carried out.

Who is responsible for house insurance between exchange and completion?

The contract agreed upon between the buyer and seller will determine who is responsible for insuring the property between the exchange and completion dates.

In most cases, the buyer will be responsible for getting adequate insurance coverage for their new property from the exchange date onwards. However, there are some exceptions:

When the contract of sale has been specifically amended to make the seller responsible for insuring the property or when the seller is obliged to maintain the insurance. For example, if they have a tenancy or leasehold agreement or another separate contract.

Things to keep in mind about house insurance between exchange and completion

If you’re selling or buying a property, there are a few key things to keep in mind regarding house insurance.

When it comes to insuring the property between the exchange and completion dates, ensure that you understand the terms of the contract. It should provide clear guidelines on who will be responsible for insuring the property during this time.

If you are buying the property and are responsible for getting house insurance between exchange and completion, double check that a policy is in place as soon as possible after the exchange.

If you are planning to move into the property on the completion date, consider getting a policy that covers both the building and its contents. A combined building and contents policy will protect your personal belongings once you move home.

You should also check with the insurance company to see if there are any exclusions or restrictions in the policy that may impact the coverage during the period between exchange and completion.

If you are buying a property:

You should know that you cannot rely on the seller’s insurance policy between exchange and completion unless the seller is obligated to insure the property.

The reasons for this are as follows:

  • The seller may decide to cancel their policy upon the exchange of contracts.
  • The seller may not have insured the property at all, as there is no legal obligation for home insurance.
  • The seller may have unintentionally under-insured the property.
  • The seller may not have adhered to the conditions of their insurance policy, leading to invalid coverage.
  • The seller may not have a valid insurance policy, for example, if they have not updated it with the correct information or made a mistake when taking the policy out.

If you are selling a property:

Although the obligation to insure the property is passed to your buyer on the exchange date, relying on their policy is unwise.

Sellers should keep their home insurance policy valid until the completion date. Doing this provides cover should the buyer fail to take out an insurance policy on the house. It ensures that the property is covered until you no longer have a legal interest in the property, and any level of risk is eliminated.

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