Right from the moment that of exchange of contract, the risk of accidental damage to the property passes to the buyer, who will have to bear all costs related to the damage. This article explains the duty of the solicitor in explaining about the consequences of not insuring the property.
The risk of accidental damage is subject to the fact that the damage is caused due to seller’s lack of care. Therefore care should be taken to ensure that the property is insured right from the time of exchange of contract. A conveyancing solicitor acting on behalf of the buyer should explain the consequences of not insuring to the buyer. A solicitor who fails to carry the buyer’s instructions regarding insuring the property can be accused of negligence if the buyer suffers any loss due to lack of insurance.
The seller is not required to insure the property unless it is mortgaged. But it is common for the seller to insure the property and maintain the existing insurance policy until completion of the transaction. Thus, there would be 2 insurance policies thereby increasing the risk that the buyer’s insurance claim would be reduced. To the uninitiated, when 2 insurance policies exist on the same property, it is not possible to make a full claim. Thus, a special condition to this effect should be included in the contract.
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