When buying a home, arranging building insurance before completion is a crucial step that often flies under the radar. While it might seem like a mere formality, it's actually a vital legal and financial safeguard that you shouldn't overlook.
Why It’s Required at Exchange
At the point of exchange, contracts become legally binding, meaning you're committed to purchasing the property. If anything happens to it between exchange and completion, you're still responsible. Building insurance ensures you're protected from unexpected damage, such as fire, flooding, or structural issues, during this period. Most lenders also require it as a condition of the mortgage to protect the asset they're helping you buy.
What Building Insurance Covers
A standard policy covers the property's structure—walls, roof, floors, and permanent fixtures like kitchens and bathrooms. It doesn't cover contents, which can be insured separately. Ensure your policy provides enough cover to completely rebuild the property, not just the purchase price, as rebuilding costs can differ.
Checking and Choosing the Right Policy
Before exchanging contracts, compare quotes from reputable insurers and scrutinise the small print. Look for exclusions, limits, and requirements, especially if the property has unique features like a thatched roof or is in a flood-risk area. Make sure the policy starts on the day of exchange, not completion.
Don’t Leave It Too Late
Your solicitor will likely ask for proof of insurance before you exchange, so organise this in advance. This avoids delays and ensures your future home is protected from day one.
Building insurance isn't just a tick-box task—it's your first layer of defence for your biggest investment. If you're navigating the home-buying process and need guidance, we at Bond Residential are here to help ensure your journey is smooth and secure.
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