Are you considering taking out
hazard insurance on a property before you actually take title? It may be a good
idea!
Even though you are not yet the owner of record,
as the buyer, you have an insurable interest in a property the moment that you
and the seller execute the sales agreement. As a matter of practice, however,
buyers do not usually take out insurance until the papers change hands, and it
should not be necessary if the agreement of sale is properly executed.
It is very important to both parties that the
agreement states that the property will be insured for a specific amount. From
the buyer's point of view, it is important that an adequate sum be stipulated,
and that the agreement not read "as now insured"--which can indicate
that the seller may not want to increase the insurance.
As a general rule, the amount of insurance on the
buildings on a property should equal the sales price, less the value of the lot.
