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Do I Have to Insure a House on Exchange of Contracts

Do I Have to Insure a House on Exchange of Contracts

When buying a house, one of the most important steps is to exchange contracts. This is the moment when the sale becomes legally binding, and both the buyer and seller are committed to completing the transaction. Many people wonder whether they need to insure the house at this point, and the answer is yes.

There are a few reasons why it is important to insure the property as soon as contracts are exchanged. Firstly, the house is now legally yours, and you are responsible for any damage that may occur to it. If there were to be a fire or a flood before completion, you would be liable for the cost of repairs if you did not have insurance in place.

Secondly, your mortgage lender will require you to have buildings insurance in place before they release the funds for the purchase. This is to protect their investment in the property, as well as your own. If you do not have insurance, the lender may not release the funds, which could cause delays to the completion of the sale.

Finally, many exchange of contracts take place several weeks before the completion date. During this time, the property may be unoccupied, which can make it more vulnerable to theft or damage. Having insurance in place will give you peace of mind that the property is protected against these risks.

When taking out insurance, it is important to make sure that the policy covers all the risks that you are likely to face. Buildings insurance will cover the fabric of the property, including the roof, walls and floors, and should also include cover for any fixtures and fittings that are part of the property. Contents insurance will cover your personal belongings, such as furniture and electronics, and can be particularly important if you are leaving the property unoccupied for a period of time.

In conclusion, insuring a property on exchange of contracts is essential to protect both the buyer and the lender. It is important to make sure that the policy covers all the risks that you are likely to face, and that it is in place before the completion date. By taking the time to arrange insurance, you can ensure that your new home is properly protected from the moment that you become legally responsible for it.

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