Help! Just exchanged then house burnt down!
- Thread starter tigerGT
- Start date
I always thought that this sort of situation was the reason we are all told to take out insurance straight away.
What would have happened if the owner had let his insurance laps after signing the contract with you??
Hi Missmuffit. I am in the same boat as you. I was encouraged to take out insurance from when I exchanged contracts just to be safe and for the extra cover yet I found out when I logged my claim that I am not liable untill settlement. This is why I dont understand the insurance before settlement part. I thought that I would be covered if the seller didnt have insurance but this isnt the case either.
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As my solicotor was saying, the insurance will cover you if your contract states early access to the property but even then he beleives you will have a little legal dillema on your hand because the insurance will still try to get out of it if its pre-settlement.
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The house is in campbeltown area and yes it was local vandals.
I'm glad that things look like they'll turn out OK for you, but I am very surprised at this. Since I'm sure that you can be forced to settle despite a fire, I'd love to know how you protect yourself if your insurer says that despite accepting payment for the policy, they won't provide coverage until settlement.
I'll do some research into this, for sure. Thanks, George, for sharing.
I do not think you are right if in WA (I guess this kind of situation is the same). The buyer does not have to settle if they choose to . in most of cases, the buyer chooses not to go ahead and deposits fully refunded. This is black-while written on the General Conditions (may not on your O&A itself)
I always thought that this sort of situation was the reason we are all told to take out insurance straight away.
What would have happened if the owner had let his insurance laps after signing the contract with you??
The question of whether an insurer will pay in these sort of instances will ulitmately come down to who has a pecuniary (i.e. financial) interest in the property. Obviously, you cannot cannot make a claim if you have not experienced a loss.
Otherwise it wouldn't be insurance. it would be gambling.
In this instance your insurer is saying that you can't show a "loss" therefore they don't need to respond.
If the house was, for example, not insured by the vendor, things would potentially be different.
All that said, *always insure*!
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UPDATE:
Hi Guys,
Things turned out not the way I wanted at all. As you know I offered 240K on house, we exchanged and then a few weeks later the house burned down. It was a big fire and I was quoted by several buildiers that it was going to cost me around 80k to repair.
My insurance didnt cover it because they said the house was not in my name. I didnt mind because I thought that her insurance would pay for it but guess what? They REJECTED the claim. The vendors tennants moved out and she didnt notify the insurance company that the house was not being tennanted. It was for this reason that they rejected her claim.
I was left to ponder what to do. I have paid 240K for a burnt house. It was not just a little fire. Even the roof was burnt and the wooden frame was burnt in most places. There was holes in all roofs and fire had gotten through everywhere. I made a very low offer of 120k for the house. the offer was rejected and I got my 12k deposit back after 4 months.
I was not happy with the outcome at all. Why?
1. Next door neighbour house recently sold for 290k
2. I was advised to take out insurance after contracts exchanged yet what is the point since insurance wont cover u if its not in ur name anyway
3. I recieved no compensation for out of pocket solicotor expenses or other losses.
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Hope you have learnt something from this.
Hi Guys,
Things turned out not the way I wanted at all. As you know I offered 240K on house, we exchanged and then a few weeks later the house burned down. It was a big fire and I was quoted by several buildiers that it was going to cost me around 80k to repair.
My insurance didnt cover it because they said the house was not in my name. I didnt mind because I thought that her insurance would pay for it but guess what? They REJECTED the claim. The vendors tennants moved out and she didnt notify the insurance company that the house was not being tennanted. It was for this reason that they rejected her claim.
I was left to ponder what to do. I have paid 240K for a burnt house. It was not just a little fire. Even the roof was burnt and the wooden frame was burnt in most places. There was holes in all roofs and fire had gotten through everywhere. I made a very low offer of 120k for the house. the offer was rejected and I got my 12k deposit back after 4 months.
I was not happy with the outcome at all. Why?
1. Next door neighbour house recently sold for 290k
2. I was advised to take out insurance after contracts exchanged yet what is the point since insurance wont cover u if its not in ur name anyway
3. I recieved no compensation for out of pocket solicotor expenses or other losses.
.
Hope you have learnt something from this.
I'm sorry to hear of the outcome, Tiger GT. However you did get your 12k deposit back, so isn't that good? (I thought it might have been non-refundable)
I'm sure it caused you a lot of stress and worry though. It really does make you pause and wonder why we are told to take out insurance from contracts being exchanged...
I'm sure it caused you a lot of stress and worry though. It really does make you pause and wonder why we are told to take out insurance from contracts being exchanged...
tigerGT, have you sought legal advice? I really think you had an insurable interest in the property, otherwise - as auror highlights - why do insurance companies continue to accept our business when we buy policies prior to settlement?
I know it's not a great outcome, but in some ways, given the insurance dramas, I'm somewhat surprised it didn't end up even worse. I'd also be interested to know on what grounds you were able to rescind the contract and get your insurance back, as I didn't think you'd be able to, either.
I know it's not a great outcome, but in some ways, given the insurance dramas, I'm somewhat surprised it didn't end up even worse. I'd also be interested to know on what grounds you were able to rescind the contract and get your insurance back, as I didn't think you'd be able to, either.
After reading that outcome, I started to get a bit worried about the vendors insurance not paying out because she failed to notify tenant had vacated. Am I supposed to notify my insurance co. every time a property doesn't have tenants in there for a week or 3?
Comments;
From my insurance broker:
From my fiancee at an insurance co:
So in between tenants is ok, but prolonged period perhaps due to sale should be notified. I wonder how long she had it empty for? Sounds like the vendor had a poor policy.
Comments;
From my insurance broker:
From my fiancee at an insurance co:
So in between tenants is ok, but prolonged period perhaps due to sale should be notified. I wonder how long she had it empty for? Sounds like the vendor had a poor policy.
Hi,
For me as soon as any of my IP become vacant I will notify the insurance regardless because I dont want to risk it. The insurer was comminsure and they are a good insurer. The vendor had a good policy too however as you said the house had been vacant for over 60 days. The agent recommended to the vendor not to re-lease the house so that people can go in and out of the premises for inspections while its for sale.
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There was no problems for me to get the deposit back. When I made the purchase I bought a house worth 240k and as per the contract they need to provide it to me exactly the same on settlemtn day. Because it was burnt down I was able to rescind and get deposit back. If her insurance had paid for damages I would have let them repair the house and delay settelment untill the house was restored to new condition.
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Lesson learnt: When house is vacant notify insurance. I know there is a 60 day clause but when the insurance companies are set to lose over 100k they look for smallest thing to reject a claim
For me as soon as any of my IP become vacant I will notify the insurance regardless because I dont want to risk it. The insurer was comminsure and they are a good insurer. The vendor had a good policy too however as you said the house had been vacant for over 60 days. The agent recommended to the vendor not to re-lease the house so that people can go in and out of the premises for inspections while its for sale.
.
There was no problems for me to get the deposit back. When I made the purchase I bought a house worth 240k and as per the contract they need to provide it to me exactly the same on settlemtn day. Because it was burnt down I was able to rescind and get deposit back. If her insurance had paid for damages I would have let them repair the house and delay settelment untill the house was restored to new condition.
.
Lesson learnt: When house is vacant notify insurance. I know there is a 60 day clause but when the insurance companies are set to lose over 100k they look for smallest thing to reject a claim
I'm confused. I bought a house in Blackwater last year and after signing the contract but before it settled the hail storm did some damage to it. I took out insurance right after contract was signed and thought it was now my responsibility to get it fixed up but the vendors insurance payed for all damages. So did I need insurance at all before settlement? This would be good to find out for next time.
Sorry to say but comminsure were/are not a good insurer, and I talk from experience. What occurred doesn't surprise me. In my case I got screwed a little, but i had a structual engineer at the time who wrote a brilliant report. The house was a write off and they offered 40k less than what the policy was insured at. Oh and it's not comminsure that deal with you, they outsource to another business that has the contact and screws you over, on comminsures behalf of course. Never again comminsure!
As many forumites will know, I'm a researcher; I like to get to the facts.
This thread so intrigued me that I contacted the Insurance Ombudsman Service in order to get a definitive answer regarding insurance prior to settlement. Their advice:
If you have a binding contract to purchase property, you have an insurable interest and thus are entitled to insure the property, and make a claim on that insurance.
You do, however, have to meet all the same disclosure obligations as the owner, so unfortunately, in tigerGT's case, the insurer may have been "right for the wrong reason". tigerGT did have an insurable interest in the property, and the IOS would be willing to take up tigerGT's case if the insurer claimed otherwise. But for the same reason that the vendor's claim was denied, ie vacancy > 60 days, it's highly likely that tigerGT's claim could be denied on the same basis, unless tigerGT had notified his insurer that the property was vacant.
Purchasers should definitely get insurance immediately upon contract signature. If there are two policies active when the claim arises, the two insurers will usually split the costs 50-50, or if one company has a superior level of coverage, they would usually bear more than 50% of the total claim cost. If one of the policies is, for some reason, invalid, then the entire claim is against the policy that is valid. No, you can't profit from two payouts! (That seems logical to me, but I'm sure somebody was wondering.)
This thread so intrigued me that I contacted the Insurance Ombudsman Service in order to get a definitive answer regarding insurance prior to settlement. Their advice:
If you have a binding contract to purchase property, you have an insurable interest and thus are entitled to insure the property, and make a claim on that insurance.
You do, however, have to meet all the same disclosure obligations as the owner, so unfortunately, in tigerGT's case, the insurer may have been "right for the wrong reason". tigerGT did have an insurable interest in the property, and the IOS would be willing to take up tigerGT's case if the insurer claimed otherwise. But for the same reason that the vendor's claim was denied, ie vacancy > 60 days, it's highly likely that tigerGT's claim could be denied on the same basis, unless tigerGT had notified his insurer that the property was vacant.
Purchasers should definitely get insurance immediately upon contract signature. If there are two policies active when the claim arises, the two insurers will usually split the costs 50-50, or if one company has a superior level of coverage, they would usually bear more than 50% of the total claim cost. If one of the policies is, for some reason, invalid, then the entire claim is against the policy that is valid. No, you can't profit from two payouts! (That seems logical to me, but I'm sure somebody was wondering.
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yeah, as above, if the house is vacant for more than 60 days, you must let your insurer know, and they must approve it, otherwise any claims will be rejected
by the way, this is something to keep in mind for those who like to go on extended holidays
if you are away for more than 60 days and something happens on day 61, you'll be on your own.
by the way, this is something to keep in mind for those who like to go on extended holidays
if you are away for more than 60 days and something happens on day 61, you'll be on your own.
