Buildings insurance between exchange and completion

Why do I need buildings insurance from the moment of exchange?

Under the Standard Conditions of Sale in England and Wales, risk passes to the buyer at the exchange of contracts. That means if the property is damaged between exchange and completion, you’re still legally required to complete the purchase. This includes damage from fire, storm, flooding or another insured event.

In simple terms: once you exchange contracts, the property becomes your financial responsibility, even though you don’t yet own it outright. Buildings insurance can protect you during this vulnerable period.

Additionally, mortgage lenders often require proof that buildings insurance starts on the day of exchange, not completion.

What is the difference between exchange and completion?

Exchange of contracts is when the sale becomes legally binding. Both parties are committed, and a completion date is set.

Completion is when the remaining funds are transferred and ownership changes hands. This is when you receive the keys and can move in.

The gap between exchange and completion can be anything from a few days to several weeks. It’s during this period that buildings insurance is required.

What happens if the property is damaged and I don't have cover?

If the property is damaged after exchange and you don’t have buildings insurance in place:

• You’re still legally required to complete the purchase
• You might have to pay the full cost of repairs (or even rebuilding) out of your own pocket
• Your mortgage lender could withdraw their offer if the property’s value is affected

For example, if a fire destroys the property before completion, you would still be contractually bound to buy it. But without insurance, you’d face the financial consequences yourself.

That’s why arranging cover that’s in effect from the moment you exchange is so important.

Can I get temporary home insurance between exchange and completion?

Yes. While some standard insurers may not offer very short-term policies, there are specialist home insurance providers that offer short-term home insurance, sometimes referred to as exchange of contracts insurance.

These policies are designed specifically to bridge the gap between exchange and completion. They typically offer buildings-only cover for a set period, ensuring you meet legal and mortgage requirements without committing to a long-term policy immediately.

Despite this, buyers often simply arrange a standard annual buildings insurance policy to start on the day of exchange.

Find out more about insuring an unoccupied property.

Will my existing annual home insurance policy cover this period?

Possibly, but it’s important to check.

Some major insurers include a clause that temporarily extends your current buildings insurance to cover a new property from exchange, usually for a limited period.

But this benefit isn’t guaranteed - it may only apply if you’re moving home, and you’ll usually need to notify your insurer in advance.

It’s always best not to assume you’re covered. Be sure to confirm in writing (including email) before relying on an existing policy.

How do I arrange buildings insurance before exchange of contracts?

It’s all in the preparation. To avoid delays or gaps in cover:

• Start getting buildings insurance quotes well before you exchange
• Confirm the rebuild value of the property (often found in the mortgage valuation)
• Set the policy start date to match the expected exchange date
• Provide proof of insurance to your mortgage lender, if required

Your solicitor will usually remind you to have insurance in place, but it’s your responsibility to arrange it.

Setting the policy to begin on the day of exchange is the best way to be certain there’s no gap during which the property is uninsured.

What are the rules for insuring a new-build property before completion?

New-build properties can be slightly different.

In many cases, the developer retains responsibility for insuring the building until legal completion, though this depends on the contract.

Even if the developer has insurance in place:

• Your mortgage lender may still require confirmation
• You should check exactly when responsibility transfers
• You may need your own policy to start from completion

Always review the contract carefully and ask your solicitor for clarification.

Who is responsible for insurance if the property is leasehold?

If you’re buying a leasehold property, such as a flat, the buildings insurance is usually arranged by the freeholder or management company.

In this case:

• The cost is typically included in the service charge
• You won’t usually need to arrange separate buildings insurance
• You should request confirmation of cover and check the policy limits

Even with leasehold properties, it’s essential to verify who holds responsibility. Don’t assume it’s included without checking.

Find out more about the difference between freehold and leasehold in our guide.