The general rule at common law is that the ‘risk’ in a property passes to the buyer as from exchange of contracts. Thus, there is no need for the seller to insure between exchange and completion since he will not be at risk (unless the contract says otherwise).

Standard Condition 5.1.1, however, says the seller is under an obligation to transfer the property to the buyer in the same physical state as it was in at the date the contracts were exchanged (subject to fair wear and tear). Moreover, under 5.1.2, if the ‘physical state of the property makes it unusable for its purpose at the date of the contract’ at any time before completion, then the buyer has an absolute right to rescind (and the seller has a qualified right to rescind). Despite those obligations, 5.1.3 makes it clear that the seller is under no obligation to insure (and 5.1.4 confirms that if the seller does insure then any insurance moneys received will go solely to the seller). In practice, of course, 5.1 is often amended and it is usual to exclude 5.1.1 and 5.1.2 so that the normal common law rules apply (ie the risk passes to the buyer when contracts are exchanged). As a result, it is usual practice for both buyer and seller to insure; although that may lead to extra expense, it does allow either party to make a full claim against their own insurer (both parties have different insurable interests in the properties, but they can still insure it against identical risks).