If you`re in the process of buying a property, you`ll hear the term “exchange of contracts” thrown around often. This legal process signifies the point when the sale of the property becomes legally binding. Before you exchange contracts, you`ll want to consider securing your buildings insurance.
What is buildings insurance?
Buildings insurance is a type of policy that provides coverage for the structure of your property. This includes the walls, roof, windows, and other permanent fixtures. Buildings insurance typically covers damage caused by natural disasters, such as storms or floods, as well as damage caused by accidents, such as a fire.
Why do you need buildings insurance when you exchange contracts?
Once you exchange contracts, you become legally responsible for the property you`re buying. This means that any damage that occurs to the property is your responsibility. If you haven`t yet secured buildings insurance, you could be left with a significant financial burden if something happens to the property.
For example, imagine that you exchange contracts on a property, but you haven`t yet secured buildings insurance. A few weeks later, a severe storm hits the area, causing significant damage to the property`s roof. Because you haven`t yet secured buildings insurance, you`ll be responsible for paying for the repairs out of your own pocket. Depending on the extent of the damage, this could be a significant financial burden.
When should you secure buildings insurance?
It`s best to secure buildings insurance as soon as possible during the home-buying process. This will give you peace of mind knowing that you`re protected in the event of any damage to the property.
Many mortgage lenders will require that you have buildings insurance in place before they`ll release the funds for the purchase. This means that you may need to secure buildings insurance before you exchange contracts.
How do you secure buildings insurance?
There are many providers of buildings insurance, and it`s a good idea to shop around to find the best policy for your needs. You can use comparison websites to compare policies and prices from different providers.
When choosing a policy, it`s important to check the coverage limits and any exclusions. You`ll also want to consider the excess, which is the amount you`ll pay towards any claim. A lower excess may result in a higher premium, so it`s important to find a balance that works for you.
In conclusion, securing buildings insurance when you exchange contracts is an essential part of the home-buying process. It will protect you from financial loss if anything happens to the property and give you peace of mind during what can be a stressful time. Take the time to find the right policy for your needs, and you`ll be able to enjoy your new home without worrying about potential damage.