Purchased property: How to keep your house insured during a change of ownership

Buying a house means taking on more than just four walls and a plot of land. Insurance issues also need to be addressed to prevent damage from fire, storm, or water from becoming a financial burden, especially with older buildings. It's crucial to understand which contracts transfer with the property, when the terms of the contracts begin, and what coverage you need to arrange yourself.

The home insurance automatically transfers to the buyer

When a property that is already insured is sold, the new owner generally takes over the existing building insurance. According to Section 95 of the German Insurance Contract Act, this occurs upon registration of the transfer of ownership in the land register, not upon signing the purchase agreement or handing over the keys. This ensures that the building remains insured without interruption.

However, buyers should therefore carefully examine the contract early on. Which risks are covered, what is the deductible, and are potential natural disasters included? The new owner may cancel the policy within one month of acquiring ownership, either with immediate effect or at the end of the current insurance period. If they only learn of the contract later, the cancellation period begins from the date they become aware of it. The insurer also has a statutory right to cancel the policy.

Until the transfer of ownership: Clarify insurance coverage together

Several weeks can pass between the purchase agreement, the handover of keys, and the registration in the land register. During this period, buyer and seller should explicitly clarify that the existing home insurance policy will remain in effect and that the premiums will continue to be paid. Because responsibilities for the property sometimes transfer upon handover, it is also worthwhile to carefully examine potential liability risks. The seller should not prematurely terminate the existing insurance coverage. The seller or buyer must notify the insurer of the change of ownership immediately to avoid problems in the event of a claim.

The distribution of costs is also important: Buyer and seller are generally jointly liable for the premium for the current insurance period. A clear clause in the purchase contract prevents later disputes. Handing over the insurance policy, terms and conditions, and any previous claims information also ensures transparency.

After the purchase: Individually mitigate risks

Not all insurance policies transfer with the house. The seller's contents insurance remains personal; buyers may need their own policy for their furniture and valuables. Homeowner's liability insurance also doesn't transfer automatically. Personal liability coverage is particularly important for rented properties or undeveloped land. For owner-occupied homes, this may already be included in their personal liability insurance.

Furthermore, check whether the building insurance is appropriate for the size, use, and features of the house. If you have planned renovations, a prolonged period of vacancy, or are facing particular natural hazards, you should speak with your insurer in good time. A new policy must seamlessly follow the existing one.

Do you want to keep track of all the insurance aspects when buying a property? We can help you keep track of important documents and handover dates, and answer the right questions early on. Contact us!

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

Photo: © Wordliner/Image created with OpenAI's ChatGPT

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