• In the course of purchasing a new home, there will come a time when the seller of the house is no longer liable for any damages to the property. This responsibility for the damages will shift to you. But when will this transfer occur? Is it at the signing of the contract or at the time of settlement? It is crucial to ascertain this so that you have a clear understanding of when exactly you should obtain home insurance.

• Let’s imagine a situation where the house is affected by an earthquake or a storm during the settlement phase. In this case, if the house is not covered by valid insurance, you will have to incur all the repair costs. This seems like a very alarming situation, doesn’t it? Read this article to discover – At what point does the responsibility for damage to the house shift to you? And when is the appropriate time to acquire Home Insurance?

What does home settlement entail?

• In the procedure of acquiring a house, after the deal has been finalized, it is necessary to sign the documents with the seller and enter a settlement period. Home settlement is the final stage of the home buying process, during which the buyer pays the agreed-upon amount to the party selling the house. This is the moment when the ownership of the house is transferred from the seller to the buyer.

The duration of the settlement period can vary by location according to local regulations. This period allows both parties to make the necessary preparations, which may include:

• (a) Securing home loan approval
• (b) Completing all necessary paperwork
• (c) Cleaning and maintaining the home for transfer

When is the right moment to purchase a home insurance policy?

• Legal experts typically advise purchasing home insurance immediately after signing the purchase documents for the home. It is possible that the seller might have insurance for the property until the settlement period, but it is always prudent to protect yourself by obtaining home insurance. There is a possibility that due to technical difficulties or because the property was co-owned, the seller may have neglected to extend insurance coverage for the settlement period. If any disaster occurs during this time, you will be responsible for the damage costs since the transaction has been finalized and you are set to become the owner of the house.

• If your residence is located in a multi-story building, it is possible that the building itself is already insured. In this instance, you only need to acquire an insurance policy for your apartment, which is determined based on the built-up area and the reconstruction cost. If your home is still under construction, the builder should have secured a project insurance policy, and you will only need to obtain insurance for your apartment once it is handed over to you.
• It’s not a legal requirement to purchase home insurance, but individuals often acquire a home for peace of mind. Consequently, whether you obtain home insurance online or offline, it will provide you with a feeling of mental peace and protection.

Why do I need pre-settlement home insurance?

• It’s a common observation that since the real estate market is an active and highly lucrative sector, sellers often attempt to save money by failing to renew the insurance policies during the settlement phase. Occasionally, in the rush to finalize the deal, property agents overlook the expiration dates of insurance policies, resulting in their lapse. As a result, the property under the settlement phase remains without any valid insurance coverage, and if any damage occurs from fire, vandalism, or natural disasters, the new buyer will have to bear the costs of repairs.
• If you are intending to purchase your new home using a home loan, it is generally required by lenders to obtain home insurance at the time they approve the loan. Taking all these factors into account, it is strongly advised to acquire home insurance during the pre-settlement phase.

Conclusion

• Acquiring an insurance policy for your home should be viewed as a wise decision for safeguarding your house as an asset. Home insurance aids in covering the expenses of repairs or significant replacements resulting from unforeseen natural or man-made disasters. In this digital era, individuals increasingly prefer to purchase home insurance online. HDFC ERGO is a frontrunner in the insurance industry and caters to all your insurance-related requirements.

Disclaimer:

• The information above is intended for illustration only. For additional information, please consult the policy wording and prospectus prior to finalizing the sales.