Have you ever been declined an insurance claim after buying a house on auction? Here are some of the reasons why.
When applying for the insurance we appreciate that it can be easy to forget some of the smaller bits to do along the way.
There is a five-step legal process to follow when buying a house at auction and in order to have full insurance cover these steps need to be followed.
Now you have put the bid down on the house you want to buy, you have had all of the surveys and valuations carried out on the property to insure you will receive the best Buildings Insurance. At this stage the insurance should be well established and ready to implement.
Exchange of Contracts
Once the contracts have been exchanged the building must be covered by Buildings Insurance. Ensure that you have given the right date when previously organising the insurance to ensure it is properly covered by this point,
Between Exchange and Completion
Although you do not own the property fully at this point, I will remind you that Buildings Insurance is essential. You must apply for it before continuing.
There are more checks at this stage, but not on the property, these are to ensure that the conveyances have all of the necessary funds from the buyer to then transfer to the seller.
At this stage we understand you may not have been granted permission to change any locks on the premises. It is because of this that we must caution you that if a previous key holder enters the property, any loss or damage will not be protected by insurance. This is because entry was not forced or violent.
We can advise you to avoid placing valuables in the house until you have the locks changed or ensure that no one enters the property unaccompanied before you get chance to do so.
Finally, the money has been transferred and the keys to the door are yours. You have all of the legal documents and the property not belongs to you. Phew.
We recommend you get the locks changed at this stage, this gives you the peace of mind that you’re fully covered if the worst should happen.
The change in ownership should be registered with the Land Registry by your conveyancer. You should pay the Stamp Duty Land Tax and inform your insurer that the completion has taken place.
You should remember that damages are not covered unless there has been a forcible or violent entry. This will be in the Benefits and Exclusions section of your contract stating-
Any unlawful loss or damage caused to the internal property unless there is violent or forcible entry.
That should have cleared it up a little for you. We completely understand peoples circumstances and want to be the ones to support you if things do take a wrong turn. By following the steps it ensures your peace of mind to be fully insured.