In­sur­ance not so straight for­ward


When ar­rang­ing in­sur­ance for a new house you may need more than just in­sur­ance on the house you are buy­ing.

A cou­ple with young chil­dren had an un­con­di­tional of­fer to pur­chase a prop­erty and had ob­tained fi­nance from a bank. Be­fore the set­tle­ment date one part­ner un­ex­pect­edly be­came very un­well and had to stop work­ing.

Sud­denly the cou­ple’s in­come was dras­ti­cally re­duced and they knew they were go­ing to strug­gle to meet their mort­gage re­pay­ments. They did not have ad­e­quate in­come pro­tec­tion in­sur­ance and found them­selves in a very dif­fi­cult sit­u­a­tion.

Most fi­nance con­fir­ma­tions spec­ify that there must be ‘‘no ma­te­rial change in fi­nan­cial cir­cum­stances’’ so you may not get the mort­gage money you were ex­pect­ing. In the event of ma­te­rial change the pur­chaser would be un­able to set­tle and would lose the de­posit paid to the ven­dor.

The ven­dor would also be able to sue the pur­chaser to make them carry out the con­tract or pay dam­ages for any loss that re­sulted.

When buy­ing a house it is ex­tremely im­por­tant to en­sure you have ad­e­quate in­sur­ance in place be­fore your of­fer be­comes un­con­di­tional. If you wait un­til af­ter the of­fer be­comes un­con­di­tional, you may find that you are un­able to ob­tain the in­sur­ance you need at the right time. There are a num­ber of things you should con­sider when look­ing for in­sur­ance:


You should en­sure that the prop­erty you are pur­chas­ing can be in­sured from set­tle­ment. If you are ob­tain­ing fi­nance, your mort­gagee’s de­tails will need to be recorded on the in­sur­ance as an in­ter­ested party.

House in­sur­ance is gen­er­ally for a sum in­sured value, al­though some­times can be for full re­place­ment value with a cer­tain floor area. There are many fac­tors to con­sider when cal­cu­lat­ing the sum in­sured for your prop­erty, so you should seek ad­vice from a reg­is­tered val­uer, quan­tity sur­veyor, or builder, if you re­quire as­sis­tance in cal­cu­lat­ing the sum in­sured value.

Life in­sur­ance pro­vides for a sum to be paid out upon the death of the pol­icy holder, or some­times in the event that they be­come ill.

In­come pro­tec­tion in­sur­ance


No­tify your in­surer in ad­vance of the new ad­dress and when the con­tents will change ad­dress. They need to know where the new house will be and other de­tails that can al­ter the risk pro­file.


Make sure you look at get­ting in­sur­ance for the move as your nor­mal con­tents in­sur­ance will not cover this.

Prior to con­firm­ing your con­tract and as part of your in­ves­ti­ga­tions of the prop­erty, you should con­tact your in­sur­ance provider(s) to dis­cuss the var­i­ous types of in­sur­ance avail­able and what best suits your sit­u­a­tion.

If you have a le­gal in­quiry you would like dis­cussed in this col­umn please email Alan on aknowsley@rain­ey­ Col­umn cour­tesy of Rainey Collins Lawyers phone 0800 733 484 or rain­ey­

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