When to cancel homeowners insurance when selling house ?

HomeTips and tricksWhen to cancel homeowners insurance when selling house ?

The home insurance contract, like any other contract, may end before the agreed contractual term. We are talking about contract termination. This termination can take place for the legitimate reason of selling the house. In this case, the law created a simplified procedure so that the break-up could be initiated by both the seller and the new owner. Also, this cancellation respects a notice and is concluded within legal deadlines.

Termination of the home insurance contract by the buyer

According to Article L 121 – 10 of the Insurance Code, all homes must necessarily be insured. Even when selling his house, the seller has a legal obligation to ensure it until the date mentioned on the deed of sale. The date of the deed of sale is the date on which the keys are handed over. From that moment, the buyer can initiate the termination procedure.

The new owner has the right to cancel the insurance contract for his new home upon signing the sales contract. All he has to do is send a termination request to the insurer along with the deed of sale. Since home insurance is compulsory, it must be justified to the previous insurer that it has been purchased new home insurance. The buyer can in these circumstances leave the conduct of the proceedings to his new insurance company.

In addition, the home insurance contract is a type of contract that is renewed by tacit agreement every year. However, it can be terminated by the new owner at any time at the end of the year. He doesn’t have to pay any fees or justify himself. Since its subscription is compulsory, a new insurance contract to replace the first one must also exist beforehand.

Termination of the home insurance contract by the seller

The sale of a house constitutes a legitimate reason which could lead to the termination of his insurance contract. In this case, the seller must inform the insurance company of the sale and request a termination of his contract. The best time to bring this information to the knowledge of the insurer is the date of signing of the sales agreement.

If this conditionality is not respected, by application of the principle of continuity of the contract, the contract is transferred directly to the new buyer. In this case, it will be sent to the latter by the seller, the references of the contract, and the related guarantees.

The notice and cancellation period of an insurance contract

Under article L.113 – 16 of the Insurance Code, a notice period of 03 months is required for the termination of the insurance of the housing contract. This period starts from the date of transfer of the property, in other words, the date of the signing of the deed of sale.

Also, the termination of the home insurance contract becomes definitively effective no more than one month after sending the termination letter. The insured will be refunded the amount of their contribution that has not been fully used up.

Ultimately, the sale of a house automatically results in the termination of its insurance contract for legitimate reasons. The initiative for the procedure lies with both the seller and the buyer. It is however limited by rules of notice and deadlines.