New build housing developments – buildings insurance between exchange and completion of contracts

House insurance for an empty property that is a new build is something we are often asked for, to cover the period from exchange to completion of contracts.

Many developers use their own contracts which remove the usual requirement for the buyer to provide insurance for the property between exchange and completion. Instead, the developers cover the property on their own contractors all risks insurance policies.

There are several reasons for this course of action. These reasons mean that it is far simpler for the developer to provide their own cover for the property rather than having to rely on cover provided by the buyer.

The property being purchased may still be unfinished and therefore insurance is more difficult to obtain by the buyer. Additionally, the developer may not allow the buyer access to the property (due to ongoing development / machinery movement etc) to visit the property in order to comply with the terms and conditions of their unoccupied property insurance policy. One of the last tasks for the developer, once the properties have been finished is the road surfacing and completing of the pavements/ walkways. Having individual homeowners inspecting their own properties prior to this work being carried out is a recipe for disaster, reinforcing the need for the developer to have their own policy in place between exchange and completion of contracts.

As mentioned, many developers provide their own cover on their own Contractors All Risks business insurance policy. There are always exceptions to the rule and these are usually the very small developers who are building and 1, 2 or 3 houses. These firms may consider it unnecessary to have insurance cover for the property being built (property insurance isn’t a legal requirement) or they may have cash flow difficulties meaning they simply cannot afford the cover!

Regardless of who you are buying a new property from, make sure your or your solicitor looks carefully at the wording of the contract you are presented with to ensure you can take the appropriate action regarding insurance for the property between exchange and completion of contracts.

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