Why Sellers Must Keep Property Insurance in Place Until Completion

When selling a property, it’s easy to assume that once contracts are exchanged, responsibility begins to shift to the buyer. However, one critical obligation remains firmly with the seller: maintaining buildings insurance right up to the day of completion.

Failing to do so can expose both parties to serious financial and legal risks.

The Key Difference: Exchange vs Completion

In a property transaction, two important milestones often get confused:

• Exchange of contracts – when the agreement becomes legally binding
• Completion – when ownership officially transfers to the buyer

Between these two points, there is a period—sometimes days, sometimes weeks—where the seller is still the legal owner of the property.

You Still Own the Property

Until completion takes place, you remain the legal proprietor. This means the property is still legally yours, along with all the responsibilities that come with it.

If the property suffers damage during this period—such as fire, flood, or structural issues—you are still accountable.

What Happens If You Cancel Insurance Too Early?

Letting your insurance lapse before completion can lead to serious consequences:

1. Financial Loss
   If the property is damaged or destroyed before completion and you are uninsured, you could face significant repair or reinstatement costs out of your own pocket.
2. Breach of Contract
   Most sale contracts require the seller to transfer the property in the condition it was in at exchange (allowing for fair wear and tear). If damage occurs and you cannot rectify it, you may be in breach of contract.
3. Breach of your Mortgage terms
   Where a mortgage is secured against the property, failure to insure the property whilst you remain a legal proprietor would be a breach of your mortgage terms.

But Doesn’t the Buyer Have Insurance Too?

In many cases, buyers are advised to arrange buildings insurance from exchange. However, this does not remove the seller’s responsibility.  Equally, where buyers insure the property, the assumptions upon which the insurance is offered may not be correct thus invalidating the insurance.

There can be overlap, but the key point is this:  until completion, the risk ultimately remains with the seller as the legal owner, unless explicitly agreed otherwise in the contract.

How We Support Sellers

We regularly advise clients on their responsibilities during the sale process, ensuring that nothing is overlooked in the critical period between exchange and completion. Our aim is to protect your position and help your transaction proceed without unnecessary risk or delay.

Final Thought

Cancelling your insurance early might seem like a small administrative step—but it can have major consequences. Maintaining cover until completion is a simple yet vital safeguard that protects your property, your finances, and your sale.

If you’re unsure about your obligations as a seller or need guidance during your transaction, we’re here to help.