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Do I Need Buildings Insurance on Exchange?
When you have finally made that decision to purchase your own home, there is always so much to think about and so many hoops to jump through before you can even get the ball rolling. One of the last things most buyers ever consider is obtaining buildings insurance for their new property.
Many people consider their new house for the locality of schooling, journey times for work, to be near family or maybe for its investment potential, but you should also be researching its insurability to ensure that suitable buildings insurance can be purchased.
What many also fail to realise is that under the Law Society Standard Conditions of Sale (5th Edition), which is used in most standard sale & purchase transactions, the emphasis is on the buyer to have their buildings insurance in place and active from the point of exchange of contracts – not completion.
Secondly, if you are using a mortgage lender to fund your purchase it is a condition of any mortgage offer that adequate buildings insurance must be in place immediately following exchange of contracts.
What information do I need to provide my building insurer?
Information regarding historically insuring the property should be provided by the Seller’s via their Solicitors. But this information may not provide all of the details asked of you, “the New Buyer” by the insurance company or broker.
It is important that you provide true and accurate information when applying for your insurance. Some clients can claim to know the area in which they are purchasing, however it is important that thorough investigations are completed.
Your Conveyancer will be able to obtain various searches on your behalf that can highlight such things as structural deficiencies, previous flooding, underground mining and other factors that may have an influence on your buildings insurance.
Have you considered the future saleability of the property?
You must also consider how any of this will affect the saleability of a property in the future and any materialistic and structural damage that such things as flooding or subsidence can do to your property. Surface water flooding for example, is affecting more and more properties as years go by.
Information regarding flooding is available via the website of the Environmental Agency detailing what defence measures and funding projects are being put in place over the next 6 years. The Environmental Agency estimates that over 5 million (1 in 6) properties in England and Wales are at risk of some kind of flooding so it is imperative that research is done early on in your transaction to avoid any later delays.