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Building insurance when exchanging contracts on a property

With increasingly better mortgage deals, lower interest rates, and extra support for first-time buyers via the Mortgage Guarantee Scheme, the residential property market in 2025 is buoyant. In May 2025 alone, government figures suggest an unexpected 25% uplift in sales on the previous month.   

22.10.25

By Christine Farmer

Building insurance exchange

Whatever your motive for buying a property, it’s important to get the right insurance in place at the right time. Unfortunately, not all buyers realise that they usually need to take out building insurance from the day they exchange contracts – not when the sale has completed. To help clarify exactly when you need insurance, we explore what to look for when buying freehold or leasehold property. 

 

Who is responsible for insurance between exchange and completion? 

When you exchange contracts on a property as a buyer, this is normally the point at which the risks of ownership are passed on to you. The seller should also maintain building insurance between exchange and completion in case of any issues before you complete.  

If you are buying a freehold property, you should arrange building insurance that begins on the day contracts are exchanged. If the property is leasehold, the responsibility for the building insurance normally lies with the freeholder, landlord, or managing agent. You should check that this insurance is in place before exchanging contracts. 

However, some contracts are drafted specifically to ensure the risks of ownership remain with the seller during the period between exchange and completion. In this scenario, the buyer will need to take out insurance that begins on the day of completion instead. 

Do you need building insurance before or after exchange? 

If you are a buyer who requires building insurance, you can arrange cover in advance of exchange to take effect on the exchange date, helping you avoid a gap in cover between exchanging contracts and taking out a policy.  

Who is responsible for property repairs after exchange? 

The buyer should have an insurance policy in place from exchange and the seller should also maintain a policy on the property until completion.  Any claims will normally be covered by one of the insurers or split between them depending on the issue and the length of time between exchange and completion. If neither insurance policy covers the damage, the seller will be responsible for rectifying the issue before completion. 

If you are buying a leasehold property, you should check the terms of the lease to determine who is responsible for property repairs after exchange. Normally, the building insurance policy held by the landlord, freeholder, or managing agent will cover major issues such as fire, flood, or subsidence. You will usually contribute to the cost of this cover through a management or service fee. However, if it is internal damage, then whether your insurer or the seller’s covers the claim will depend on the length of time between exchange and completion.  

What happens if the house sale falls through and you’ve purchased the insurance?  

If you’ve purchased building insurance and the house sale falls through, you should consult the terms of the policy. When you buy a policy, you should have a 14-day cooling-off period, commencing from the date of purchase (or the date you receive the policy documents, if this is later). This allows you to cancel the policy and get a full refund if the cover hasn’t yet started.  

After the cooling-off period, you’ll generally have to give your insurer notice that you want to cancel your policy. This is typically set at 31 days. 

If the cover has started, you may be charged for the time the property was insured. If you have made a claim within this period, you may find you are charged the remaining payments (if paying by monthly direct debit), or you may not receive a refund if you’ve paid outright. 

Can you exchange contracts without insurance? 

Legally, the standard Conditions of Sale (which are widely used by solicitors in the UK) state that buyers must have a valid insurance policy in place from the moment of exchanging contracts.  

Practically, both residential and buy-to-let mortgage lenders usually require building cover to be in place when you exchange contracts. Some lenders will even insist on arranging insurance for you from the moment of exchange (or that you take out cover that meets their criteria).  

Reasons to consider getting building insurance before exchange 

The main reason for getting building insurance in advance of exchange is that it gives you time to find the best policy for your needs. If you’re buying what will become your main home, you’ll normally need a standard building insurance policy. Should the property be older, you may find that listed building insurance offers more appropriate cover. If you’re investing in a buy-to-let property, then you’ll need building insurance for landlords.  

One important thing to bear in mind is that you’ll need a policy that covers the cost of rebuilding the property, which won’t necessarily be the same as the price you’re buying it for. If the home were to be destroyed between exchange of contracts and completion, you’d need adequate cover to reinstate the property. 

Once you have found an appropriate policy, you can arrange for it to come into effect as soon as you exchange contracts. This means you don’t have to risk taking out an inadequate policy on exchange day or leaving the property uninsured for any period.  

What if you are buying a new build 'off plan'? 

When you buy a new build property, it will typically come with a warranty. The warranty that comes with an off-plan new build will cover snags and defects during the first couple of years. These can cover everything from ill-fitting windows to improperly installed kitchen units. The warranty will also cover you against structural faults for ten years. These could include major problems with roofing, rendering, or foundations. However, you won’t be covered for events such as storms, floods, vandalism, or fires. For this reason, it’s safest to have building insurance in place from the moment the risk of owning the property passes to you. 

Potential drawbacks of arranging insurance too early 

There aren’t many drawbacks to arranging insurance early. As long as your policy comes into effect at the correct time, organising it in advance gives you more choice of policies and less stress when selecting cover. However, you normally won’t be able to take out a policy more than 30 days in advance of the date you want it to come into effect. 

What insurance do you need if you are not moving in straight away? 

If you, or tenants, aren’t moving into the property straight after completion, then you may need to revise your insurance.  

If the property will be your main home or you will be letting it out to tenants, a residential or landlord building policy should be suitable as long as the home isn’t unoccupied for more than 30 days (although different insurers will have different unoccupancy limits, so check the terms of your policy). 

Should you need to leave the property unoccupied for more than 30 days, you may need to arrange unoccupied house insurance to cover the increased risk. On the other hand, if you’re having major work done to the property before anyone moves in, property renovation insurance may be a more suitable option.  

How do you arrange buildings insurance before exchange?

Arranging buildings insurance before exchange doesn’t have to be a challenge. Some landlords assume you need to arrange these policies quickly on the exchange day, but you can get everything in place beforehand. Most buildings insurance companies will give you the choice of a policy start date, so you can set up cover in advance once you know when the house will exchange.

Your insurance provider will need to know a lot of details about the property to provide an insurance quote. You should be able to get all the information you need to answer their questions from your conveyancer and the seller.

If there are any questions you aren’t able to answer then it is best to be honest with your insurer rather than guess and risk not being adequately covered should you need to make a claim. It is also always worth asking your solicitor to check over your buildings insurance before exchange.

Alternatives to arranging full building insurance before exchange? 

There are alternatives available, but we would always advise ensuring you have the correct insurance in place when exchanging contracts on a property you’re purchasing. Options include: 

  • Not arranging insurance at all. This leaves your investment at risk and may void the terms of any mortgage you have on the property. 

  • Allowing a mortgage lender to arrange building insurance. Where this is offered, it’s usually more expensive than arranging your own cover and may not include any additional covers. 

  • Last-minute purchase on the day of exchange. Given you can choose when cover begins (up to 30 days in advance), it is better to sort this out in advance to avoid the stress. 

  • Relying on the vendor’s insurance. If you do this, ensure that the contract terms stipulate that the vendor must have appropriate insurance in place between exchange of contracts and completion. 

As we’ve seen, when buying a leasehold property, the responsibility for holding building insurance typically lies with the freeholder, landlord, or managing agent. If you are purchasing a leasehold, check that the relevant party has insurance in place. 

Key questions to ask your broker, insurer and mortgage adviser 

When arranging building insurance to cover the period between exchange and completion, it can be worthwhile asking your broker, insurer, mortgage adviser (or lender) the following questions.  

Questions for your building insurer or broker: 

  • If the date of exchange changes, can the policy be modified to start on the new date? 

  • Will the policy be valid if the property is unoccupied between exchange and completion? If so, for how long? 

  • Are there any restrictions or exclusions that apply before completion? 

Questions for your mortgage adviser / lender: 

  • Will my mortgage terms require building insurance from exchange to completion? 

  • Does the lender allow me to arrange my own building insurance? If so, what criteria must the insurance meet? 

What should you look for in a building insurance policy? 

When it comes to arranging building insurance before exchange, there are many options available to you. Knowing what to look out for in a policy can help you choose the right cover for your requirements, whether you’re buying a home to let or to live in.  

Always remember that your insurance needs to cover the cost of completely rebuilding the property should it be destroyed. Other aspects to consider after purchase include index-linking the sum insured to reflect inflation and including legal expenses in the event of any disputes. 

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