Many home buyers are concerned
about whether they have an insurable interest in the property before the actual
closing. The answer is an unqualified "yes". The buyer may not be the
record owner of the property yet, but he or she has an insurable interest in the
property as soon as the agreement of sale is executed by both the buyer and
So should you get hazard insurance before the
closing? It depends. Buyers do not usually insure a property until the title
passes to them from the seller. You should know what the agreement between you
and the seller stipulates in regard to insurance.
Most agreements provide that the property will be
insured for a specific amount. This is very important to both parties. From the
buyer's point of view, however, it is critical that an adequate sum or full
replacement value be stipulated. Watch out for agreements which read "as
now insured". This is an all-too-common practice which usually indicates
that the seller does not to want to increase inadequate insurance coverage.