Selling a home can be an emotional – and busy – time. Between finding the right agent, keeping your home ‘open home ready’ for viewings and all the paperwork that comes with the sales process, there’s a lot to remember.
Something often overlooked during this time is your insurance. Does it still have a purpose? When can you cancel it and what do you need to tell your insurer?
You should keep your house insurance in place for as long as you own the property. It can be tempting to cancel your house insurance as soon as your property is sold or goes unconditional, but remember you’re the owner right up until settlement.
That means until settlement it’s up to you to insure the property.
When one customer was downsizing, they cancelled their house insurance policy at the time of sale. Unfortunately, a natural disaster struck between the sale and settlement date. This created a difficult situation for the customer – there was no longer a house to be sold, and there was no insurance to rebuild it, leaving the customer facing some legal and financial difficulties.
- Don’t cancel your house insurance until settlement is complete.
- Let us know if settlement day changes.
- Already settled? Don’t forget to check on your house insurance – you might be due a refund!
Just like with house insurance, your contents insurance remains important while you’re selling your home – in fact, it may need a review.
Essentially, your contents insurance covers what you’ve insured at the location you’ve insured it at – normally, your home. But, when selling a home, many people declutter, and temporarily shift some of their contents to another family member’s home, or a storage unit. Whether these items are covered at their new (temporary) location depends on your policy. Our Plus Contents policy covers your contents stored at a commercial storage facility for less than six months, up to $20,000*.
If your parents or other family members are looking after some of your things, you might be covered under their policy but it’s best to check with their insurance company.
Once open homes and viewings start, there are a few more risks. Prospective buyers could accidentally break something, or worse – steal something. In this case theft isn’t covered by a contents policy as you’ve technically invited them into your home, however, accidental breakage is*.
One customer organised an open home via an agent. When the viewers were gone, a customer noticed that some of the jewellery was missing from a chest of draws in the bedroom. Because prospective buyers were invited into the home, and deliberately stole something, it wasn’t covered.
- Remove valuables before your open home, and either have them with you, or stored in a secure (insured) location – and no, a sock drawer isn’t secure!
- Find out whether your policy covers ‘contents in transit’ – that is, while you’re moving them from your old house to your new one.
When to purchase a new policy
When it comes to contents insurance, it’s easy – generally, we’ll just need to change the address on the policy and we’ll calculate any change in premium. If you’ve purchased a new house, it’s not a matter of simply transferring your old house policy. Your new house will likely be a little different – in size, building materials, location and so on. You’ll need to calculate the rebuild cost (sum insured) of this property by using the Cordell Sum Sure calculator or, better, getting a professional opinion.
Selling a house in a natural disaster zone
In areas that have experienced a natural disaster (such as Christchurch and Kaikoura), it can be difficult for the buyers to take out a new house insurance policy. If you’re selling a house in this region, check with your insurer that a new owner can ‘take over’ your existing policy. Some insurers will look into providing ongoing cover for the buyer but you’ll need to make sure the buyer knows the:
- current rebuild cost
- year of build that is on file
- area of the house in square metres.
The buyer will need to call us and provide this information. It can get tricky if the buyer doesn’t have the right information as due to privacy limitations, we can’t share the details of your policy with them. Making sure you’re both on the same page will make the process smoother.
To summarise – make sure your house and contents remain insured right up until the settlement of your house sale, and review your contents insurance to make sure everything is covered in the right place. And congratulations – selling a home, whether it’s your first or fifteenth, is a big milestone!
*Refer to the policy wording for full terms and conditions of the policy.