Do I insure my property from exchange or completion?
Insurance is usually offered from exchange, but you should be guided by your solicitor on the exact date to start your policy.
When you are purchasing a house – whether to live in yourself or as a buy-to-let investment – there is a potential grey area between the exchange of contracts and the completion of the sale. It is during this period that you will have signed a contract committing you to purchasing the property, but the house will not technically be yours yet as you wait for other aspects of the sale process to be undertaken, such as the conveyancing.
Insurance for a property usually begins from the exchange stage, rather than completion, due to the risk of a catastrophe affecting the property in the intervening period if there is no insurance in place. If, for instance, a fire breaks out during this period and you have not taken out insurance as a buyer, you will have to either pull out of the sale – and lose your deposit in the process – or continue to completion and be left with the ruined property.
It is also essential to have your insurance policy begin from exchange, rather than from completion, if you are purchasing the property with a mortgage, due to the need for the lender’s security to be protected. If you do not have any insurance between exchange and completion, you will probably be in breach of your mortgage conditions.
If you are in any doubt, please ask your solicitor for advice on when your insurance policy needs to start. Given that the purchase of a buy-to-let property will be one of the biggest investments you will ever make, it is in the best interests of both yourself and your mortgage lender that your property is suitably protected between exchange and completion.