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Property/DIY

Why do I have to insure the house I have exchanged on to buy?

32 replies

faraday · 16/09/2009 15:25

Actually, I haven't exchanged- wish we had!- but I understand I must insure it (bricks and mortar) the moment we exchange- why? Surely the owner still has it insured?

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randomtask · 16/09/2009 15:31

It's as soon as it's yours (completion) but we had to provide the insurance certificate on exchange with the completion date as the start.

Apparently if the house burns down the mortgage company need to know they'll get their money (and of course try to sell you the insurance too)....

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claricebeansmum · 16/09/2009 15:32

As soon as you exchange you have a legally binding contract to purchase. So should the house burn down, suffer structural damage etc before completion you would still be liable to pay the agreed amount on the agreed date.

Obviously there would be wrangling with insurance companies.

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LIZS · 16/09/2009 15:32

because you are then committed to paying the vendor and will owe the mortgage company even if it burns down before completion !

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faraday · 16/09/2009 15:45

OK, but surely as THE OWNERS, the vendors have responsibility for the house before completion? And insuring it? We are paying for a given product to take ownership on a given date. If that product is not 'as described' the vendors are in breach of contract, same as they would be if we bought and found no radiators- or a burnt out shell!

I'm not suggesting we won't be paying just I fail to understand why we are legally responsible for something we don't own!

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LIZS · 16/09/2009 15:50

btu you could argue that with other sorts of insurance - ie. why have full cover on a car if everyone is legally obliged to have 3rd party minimum ? Becasue accidents are often nto that clear cut to resolve. Your mortgage company will require cover in case anything to do with the fabric of the house affects the deal they have made to advance the money. Are your vendors sorted with a rental nopw ?

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LIZS · 16/09/2009 15:50

btu you could argue that with other sorts of insurance - ie. why have full cover on a car if everyone is legally obliged to have 3rd party minimum ? Becasue accidents are often nto that clear cut to resolve. Your mortgage company will require cover in case anything to do with the fabric of the house affects the deal they have made to advance the money. Are your vendors sorted with a rental nopw ?

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faraday · 16/09/2009 15:56

We don't have a mortgage company as we're cash buyers.

It was my understanding that you can't insure something you don't own (as told to me when a rental agent told us we had to insure our landlords carpets and curtains).

Obviously if we CAN insure this as yet unbought house we are 'protecting' ourselves against disaster but I suspect that if the house burnt down between exchange and completion our insurers would refuse to pay out til they'd exhausted suing the owners? Surely THEY need to have it insured as they have a mortgage?

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Fimbo · 16/09/2009 15:57

Hi Faraday,
How are things now?

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faraday · 16/09/2009 15:57

LISZ- our solicitor emailed today to say that 'with luck' exchange will take place tomorrow... so I assume they've got a renter!

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faraday · 16/09/2009 15:57

Hi Fimbo!

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Fimbo · 16/09/2009 16:09

Sounds hopefully then.

I demand you start a new thread when it finally happens!

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Littlefish · 16/09/2009 16:10

We re-negotiated this part of the contract so that we only had to ensure on completion.

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faraday · 16/09/2009 17:43

Fimbo, I will contact MN Towers and demand fireworks SHOULD exchange ever happen!

I thought the having insurance was either a given, ie Thou SHALT get the property you are going to buy insured at the point of exchange, or not in which case why would you, on the basis that the owners have already got the place insured. double up that insurance? It strikes me that would give instant rise to major issues SHOULD one need to call on the insurance, for both insurers to refuse to pay up 'as the other is liable'. ....AND are their issues with being 'over-insured'? As in having TWO policies on the same 'item' seeing as your insurers can legally refuse to pay up if you insure a £4000 car for £10000, then total it on the basis there's a big incentive TO total the cheap car if you'll get twice its worth out of the insurers!

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Littlefish · 16/09/2009 18:09

Not sure of the ins and outs faraday, but our solicitor (and our vendors' solicitor was happy to change the wording so that we only became liable to insure on completion.

By the way, I can spell "insure" - my fingers must have slipped in my previous post .

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HerHonesty · 16/09/2009 19:32

because as soon as you exchange the owners dont legally have to insure the property (in practice most carrying on doing so), so there is no double insurance issue.

and when "double insurance" does occur there are very well documented practice to ensure that you dont get double (in the case of car house etc). you are not legally allowed to double insure in this type of insurance.

my god if and when you exchange on this property they should declare it a national holiday.

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faraday · 16/09/2009 19:39

Tell me about it.

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brettgirl2 · 16/09/2009 21:47

Well you're exchanging before us!!!!

Thanks for starting this thread, I was sitting in the bath wondering what would happen if I burnt my house down after exchange

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faraday · 17/09/2009 08:34

Well, I'm HOPING we're exchanging soon! A new tiny but irritating fly in the ointment: the owner (singular) is signing today. Hoorah! BUT apparently she has to then take the contract HOME so her PARTNER can sign it too as he can't get to the solicitor's office ...

Thus Exchange won't happen before Friday. I am assuming all parties (esp legal ones!) know what's happening re the sudden arrival of a second owner!

Good luck brettgirl2

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HerHonesty · 17/09/2009 08:50

erm arent most couples joint owners?

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LIZS · 17/09/2009 08:52

Surely both names would have come up on the seacrh for title ?

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faraday · 17/09/2009 19:22

Well, that was the point: as far as we knew there was only one owner as every document to date had her name on it!

HOWEVER I care not because..

WE EXCHANGED TODAY!!!

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LIZS · 17/09/2009 21:22

[shcok] at last ! When do you move ?

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faraday · 18/09/2009 09:17

Nov 13th.

And as luck would have it, when the solicitor contacted DH to tell him the glad tidings, he also casually mentioned that he'd negotiated and had the insurance thing removed from us so we aren't paying for this next 8 weeks anyway.

Still strikes me as odd that you are SUPPOSED to insure something you don't own: to me it'd be like signing a contract to buy a DFS sofa, then have the warehouse burn down, then be expected a) to pay up anyway and b) to claim the loss off your OWN insurance!

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LIZS · 18/09/2009 14:56

in dfs case if you had a finance agreement(0%, pay next year etc) , you probably would still pay regardless ....

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HerHonesty · 18/09/2009 20:18

faraday. are you absolutely sure about this insurance thing? dh (solicitor) just said that at exchange you are legally bound to buy the property at the price you have agreed. regardless of whether or not it has burnt to cinders.

so you are basically relying that a) your sellers will keep their insurance in place and b) it is adequate. for the sake of £100 i would insure it.

congrats by the way. hope you are celebrating appropriately tonight.

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