17.11.25

Exchange of Contracts – When You Should Insure a Property

When moving home, arranging insurance for your new property may feel like something you can sort out closer to moving day. However, what many buyers don’t realise is that you usually need to insure your new home from the point of exchange of contracts – not just from the day you move in.

The gap between exchange and completion may only be a few weeks, but with new-build properties it can be several months. During this period, the property is still exposed to risks such as fire, storm damage, flooding or escape of water. If something happens, you could be left financially responsible without the right cover in place.

As insurance brokers, we regularly advise clients on this critical step in the homebuying process. Here are some key points to keep in mind:

When Does Cover Need to Start?

Once contracts are exchanged, the property usually becomes the buyer’s responsibility under standard conveyancing terms. That means if damage occurs before completion, you are still obliged to go ahead with the purchase. Without insurance, you could be left covering repair costs yourself.

What if You’re Taking Out a Mortgage?

Most mortgage lenders require you to have buildings insurance in place from the date of exchange. This protects both you and the lender’s financial interest in the property.

Can the Seller Continue to Insure?

Some sellers prefer to maintain their own insurance right up to completion, especially if they remain in occupation. While this may make sense for them, buyers should not rely on the seller’s cover alone. The safest approach is to put your own policy in place from exchange, even if the seller maintains theirs.

What if the Property is Damaged Before Completion?

Under standard conditions, the buyer must complete the purchase even if the property has been damaged in the meantime. Your insurance is there to fund any necessary repairs. In some cases, buyers and sellers agree to different arrangements, but this is unusual. Having your own cover in place ensures you are protected in the worst-case scenario.

Leasehold Properties

Where the property is leasehold, the freeholder or management company usually arranges the building insurance for the block, with the cost shared between leaseholders. In this case, buyers should ensure the seller maintains the premium payments up until completion, but you should still consider contents insurance and any cover for liabilities not included in the block policy.

New Build Homes

Buying a new-build can complicate matters further, as the period between exchange and completion may be much longer and the property may still be under construction. Insuring part-built properties can be more difficult, so in many cases developers are expected to keep the property insured until handover. Even so, it’s vital to review the arrangements carefully so you’re not left exposed.

Why Speak to an Insurance Broker

With so much focus on the legal process of buying a property, it’s easy to underestimate the importance of insurance. However, failing to arrange cover at the right time could leave you with significant financial exposure.
An experienced insurance broker can:

• Advise when cover should start.
• Arrange suitable buildings and contents insurance tailored to your needs.
• Ensure the policy meets your lender’s requirements.
• Guide you through potential issues such as double insurance or unusual risks.

Exchange of Contracts – In Summary

Don’t wait until moving day to think about insurance. Protecting your new home from exchange of contracts is a small step that can prevent a very big problem.

Information provided by Harrison Law, (Cert CII) Head of Commercial & Private Clients, Cox Mahon Ltd.