When you buy a home, unexpected problems and hidden damage may be lurking. Change-of-ownership insurance (ejerskifteforsikring) is designed to protect you against these potential costs in a property transaction. It takes effect when the house is handed over to you and typically covers defects and faults that were not visible at the time of purchase.
The purpose of change-of-ownership insurance is to give you financial security. This might be structural defects or damp damage, for example, that only show up after you move in. With this insurance, you avoid having to cover the often high repair costs yourself.
The main situations where change-of-ownership insurance is useful:
- Older houses: These homes are more likely to have hidden problems due to age or previous renovations.
- Renovated flats: Even if they look new, the underlying structures may have weaknesses dating from before the renovation.
- Homes with many previous owners: Each owner may have made changes without proper documentation or permission.
- Buying without professional advice: If you leave building surveyors out of the process, the risk of defects being overlooked rises considerably.
Benefits of change-of-ownership insurance for both buyer and seller
When you, as the buyer, are considering taking out change-of-ownership insurance, there are several benefits for both parties to the sale. This type of insurance not only offers security for you as the new owner, but also makes things easier for the seller and gives them protection.
Benefits for the buyer:
- Financial security: You avoid unexpected costs for repairing hidden damage.
- Legal protection: The insurance can help with legal costs if defects or faults call for it.
- Peace of mind: Fewer worries about potential problems after the move make for a better experience of your new home.
Benefits and obligations for the seller:
- Less liability: Offering change-of-ownership insurance reduces the risk of future claims from the buyer over hidden defects and faults.
- A more attractive offer: Prospective buyers may be more inclined to buy the house when they know insurance cover comes with the sale.
- Reduced financial risk: If problems arise after the sale, it is mainly the insurance company, not the seller, that deals with them.
With change-of-ownership insurance in place, the financial burden is shared more fairly between buyer and seller. The insurance cover considerably reduces the seller’s liability, which makes the whole process run more smoothly. As a seller, this lets you move on without fear of future complications relating to your former home. Both parties are therefore encouraged to consider this solution as a valuable tool in their respective roles.
Hidden damage: what is and is not covered?
When you take out change-of-ownership insurance, it is important to know which hidden damage is typically covered by the policy. Common problems such as rot in woodwork, mould behind the wallpaper or leaking gutters can often be covered. These types of damage are rarely spotted during an ordinary inspection and can lead to considerable costs if you have to put them right yourself.
On the other hand, there are also limits to the cover. For example, aesthetic flaws such as scratches on the floor or minor cosmetic defects will not normally be covered. The same applies to damage that could clearly have been spotted during a thorough inspection before the purchase.
It is crucial to understand exactly what your change-of-ownership insurance covers to avoid misunderstandings later on. If you have specific concerns about particular potential problems in your new home, you should discuss them with your insurance company to ensure clarity and peace of mind.
Period of cover: how long are you protected?
When you are considering change-of-ownership insurance, the period of cover (ansvarsperiode) is an important factor to keep in mind. It refers to the length of time during which the insurance covers hidden damage to your new home. This period typically runs from five to ten years after the purchase. This means that if problems arise within that time, you can make a claim under the policy and get help with the repairs.
It is crucial to check how long the period of cover is with different insurers, as it can vary. A longer period of cover gives you more peace of mind and protects you for longer against unexpected costs from hidden faults or defects. Make sure you are clear on these details before you buy, so you know exactly how long your new investment is protected.
How do you choose the right change-of-ownership insurance?
Choosing the right change-of-ownership insurance can seem complicated, but with a few simple steps you can find the best solution for you and your new home. Here is a guide to help you through the process:
Assess your needs: Start by considering the specific needs you have in relation to your new home. Has the house had problems such as damp or mould in the past? If so, these factors should play a part in your choice of change-of-ownership insurance.
Look into the cover: It is important to understand what each policy does and does not cover. Some insurers offer more comprehensive cover than others, so make sure you read the terms and conditions carefully.
Change-of-ownership insurance vs. home insurance: what’s the difference?
When you are about to buy a home, you will often come across both change-of-ownership insurance and home insurance. It can be confusing to work out how they differ, but here is a clear overview.
| Type of insurance | What it covers | Duration |
|---|---|---|
| Change-of-ownership insurance | Covers hidden damage present at the time of sale that the condition report did not pick up | Typically 5-10 years after purchase |
| Home insurance | Protects against fire, storm or water damage after you move in | Rolling contract that can be renewed annually |
The role of change-of-ownership insurance:
Change-of-ownership insurance is designed to protect you against unexpected problems with the home that existed before the purchase but were not discovered during the standard building inspection. This type of insurance takes effect after the property transaction itself and protects the buyer against financial losses related to these hidden faults.
The role of home insurance:
Home insurance covers you against events such as fire or storm damage once you have become the owner of the home. It focuses on protecting your investment against future risks and typically also includes liability cover in case of accidents on your property.
Although each type of insurance has its own important role, they work best together to give you comprehensive protection both before and after you buy your new home.
What does change-of-ownership insurance cost on average?
When you buy a house, it is important to consider the cost of change-of-ownership insurance. The price can vary considerably depending on several factors, including the age, location and size of the house.
Change-of-ownership insurance covers hidden damage that was not picked up by the condition report (tilstandsrapport). That is why the premium is often based on the condition of the home. Older houses, for example, will typically cost more to insure. This is because the likelihood of hidden faults and defects generally increases with age.
Location also plays a big part in the pricing. Houses in areas with a high risk of flooding or landslides can attract higher premiums. On the other hand, homes in more stable and safer areas can be cheaper to insure.
The size of the house also affects the price of your change-of-ownership insurance. Larger homes often have more elements that need inspecting and potentially repairing, which can lead to a higher cost.
To get a better estimate of what change-of-ownership insurance will cost you, it can be useful to get quotes from several insurers. Most insurers offer online calculators where you can easily enter details about your home and get a quick price estimate.
Researching the market thoroughly ensures not only a fair price but also the best cover for your new investment.
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