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Auction Property Insurance
Auctions are a fantastic way to find and buy a property at an excellent price and a much quicker pace than traditional real estate options. However, if you do buy a property at auction, you need to keep in mind that as soon as the hammer falls, the property officially belongs to you, you are committed to buying it, and responsibility for the property immediately passes to you. For this reason, you should always make sure you have auction property insurance in place, just in case you do place the winning bid.
What is Auction Insurance?
Auction insurance is not all that dissimilar to standard building insurance, it insures your new property in case of any damages.
Completion of the sale of the property is usually completed within a month of the auction date, however, as soon as the hammer has fallen and you are declared as the property winner, the property immediately becomes your responsibility. Although the property will usually already be insured by the sellers and/or auction house, you will still need to arrange your own building insurance to begin immediately.
You should arrange this insurance as early as possible, especially if you require a mortgage to purchase the property, as lenders do require property owners to have building insurance in place as a condition to their lending. Once you have the insurance in place and after you have won the property, the insurance policy will need to be activated immediately.
Why is Auction Insurance needed?
Auction insurance is incredibly important to protect you as the buyer. While previous owners/sellers may claim that the property is fully insured, it is ultimately your responsibility to make sure this is the case. When it comes to buying a property at auction, you should not take any unnecessary risks because if anything does go wrong with the property and it isn’t covered in the insurance, it will be your responsibility to fix it. Which could inevitably increase the amount your new property costs you by hundreds, or even thousands of pounds.
Auction insurance is essential for a number of reasons:
- Firstly, it may be a requirement of any mortgage offers you receive (as noted above), which means if you don’t have insurance in place, your mortgage application cannot be approved and paid out.
- Auction insurance will also cover you in if your new property is damaged, covering the costs of any repairs. Without any building insurance in place, you would be responsible for paying for the repairs yourself and the costs could start mounting if the property has lots of issues with it.
- You cannot guarantee that the property is insured and that the insurance is at the level you need it to be. By insuring the property yourself immediately, you have peace of mind that your property is covered and if you need to, it should be easy enough to make a claim. Even if the property is suitably insured by the seller or auction house, claiming through someone else’s insurance may take longer and prove to be more difficult than claiming through your own).
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