Buying a home? What you need to know about insurance between exchange and completion

In the conveyancing transaction there are two key stages. The first is known as exchange of contracts and the second is completion. Once contracts have been exchanged a legally binding contract comes into existence and neither party can legally withdraw from the deal without incurring severe financial penalties. Completion is the date upon which a buyer is entitled to have possession of the property and the date on which the seller is entitled to receive the money and must vacate the property.


The common law position is that the risk of damage or destruction of the property passes to the buyer on exchange of contracts unless the contract provides otherwise.

This position has been adopted by the Standard Conditions of Sale (5th Edition). These are a set of standard conditions designed for use in residential conveyancing transactions and are incorporated into the sale contract. Under the Standard Conditions of Sale (5th Edition) the risk passes to the buyer on exchange of contracts, so it is imperative that a buyer takes out their own policy of insurance which will be effective immediately upon exchange of contracts. 

What if I am taking out a mortgage?  

If you are taking out a mortgage on the property AND the insurance is being arranged by the lender then it is likely the lender will have the property insured from exchange of contracts. You MUST, however, check with the lender that this is the case. Do not leave this until the last minute.

What if I am not taking out a mortgage? 


If you are not having a mortgage or you have chosen not to let the lender deal with insurance, you will be responsible to arrange the buildings insurance. The seller has no obligation to you to insure the property other than in certain circumstances, for example, where the property is leasehold, or the contract provides otherwise.

What’s the next step?

Whether you are purchasing or selling your property it is important that you understand the conveyancing process as well as your liabilities. AMD Solicitors residential property service can advise you on both and will pro-actively support you to ensure your transaction is as stress free and as cost effective as possible. If you would like any further information, please call our conveyancing solicitors in Bristol on 0117 9735647 or email us directly. Alternatively, you can fill in our contact form and we will get back to you promptly.

This article is provided for general information purposes only and represents our understanding of the relevant law and practice as at the date of uploading. This article should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.

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