Building insurance during property ownership transfer: Your guide for a seamless transition including a sample letter
7 May 2025
6
Minutes
Katrin Straub
CEO at nextsure
Buying a house is exciting, but what happens to the home insurance? Learn how to avoid coverage gaps and maximise your rights as a new homeowner.
The topic in brief and concise terms
When purchasing a house, the building insurance automatically transfers to the buyer; however, the buyer has a special right to cancel within one month after the entry in the land register.
Both the seller and the buyer must inform the insurer about the change of ownership; a template letter can make the cancellation easier for the buyer.
In the event of inheritance, there is no special right of termination for the residential building insurance; in the case of a forced auction, it does not automatically transfer.
Quick Facts: The Key Information on Insurance Transfer at a Glance
When purchasing a house, the existing residential building insurance automatically transfers to the buyer in accordance with Paragraph 95 of the Insurance Contracts Act (VVG). This transfer takes place with the entry of the new owner into the land registry, not with the appointment with the notary. The buyer has a one-month special right of termination after entry into the land registry. Both the seller and the buyer are obliged to report the change of ownership to the insurer without delay. For the premium of the current insurance period, the seller and the buyer are often jointly liable. These regulations ensure uninterrupted insurance coverage for the property throughout the entire transition process.
Practical Guide: How to Act Correctly When Changing Ownership
The change of ownership of a property requires attention from both the buyer and seller regarding the residential building insurance. The seller must inform the buyer about the existing policy and hand over all documents. Both parties, buyer and seller, may notify the insurer about the sale; a copy of the land register excerpt serves as proof. For the new owner, the one-month period for the special cancellation right begins with the registration in the land register or upon notification of the insurance. Here is an example of a sample letter for cancelling residential building insurance after a change of ownership:
Max Mustermann
Musterstraße 1
12345 Musterstadt
Insurance Company XY
Insurance Avenue 2
54321 Insurance City
Musterstadt, the DD.MM.YYYY
Subject: Special cancellation of residential building insurance No. [] due to change of ownership – Property: []
Dear Sir or Madam,
I hereby exercise my right to special cancellation according to Paragraph 96 VVG and cancel the aforementioned residential building insurance for the property [] due to the change of ownership.
The change of ownership was registered on [] in the land register. A copy of the current land register excerpt is attached to this letter.
I request written confirmation of the cancellation, specifying the termination date.
Yours sincerely
[]
Max Mustermann
It is important to send the cancellation by registered mail to have proof. The cancellation can take effect immediately or at the end of the current insurance period. A careful review of whether the existing contract meets one's own needs is advisable before cancelling. Protection for your new home should be a top priority.
Expert knowledge: Legal subtleties and optimization potentials
The Insurance Contract Act (VVG) forms the legal basis for the transfer of residential building insurance. Paragraph 95 VVG regulates the automatic transfer of the contract to the buyer. Paragraph 96 VVG grants the purchaser a special right of termination. This right exists for one month from the entry in the land register or from the time the new owner becomes aware of the insurance. Our expert tip: Carefully review the existing insurance coverage. Often, older contracts no longer meet current needs or there are cheaper offers with better services. Comprehensive coverage is crucial.
As a new owner, you should note the following points:
Information obligation: The seller must inform you about the existing insurance.
Duty to notify: The change of ownership must be reported to the insurer without delay.
Premium payment: Clarify the division of the premium for the current period with the seller.
Use the special termination right: Decide within a month whether you want to keep or terminate the contract.
Seamless protection: Conclude a new contract in good time, if necessary, to avoid insurance gaps.
In the case of an inheritance, the special termination right does not apply; the contract is transferred to the heir and can only be terminated in the usual way. In the event of a foreclosure, the insurance does not automatically transfer; the buyer must arrange for insurance coverage themselves. A clear understanding of these regulations helps to avoid pitfalls and ensure optimal insurance coverage.
The template letter in detail: Phrasing and necessary information
A correctly formulated sample letter is crucial to ensure the smooth transfer of the residential building insurance, especially if you wish to exercise your special right of termination. The letter should always be sent in writing and ideally by registered mail with return receipt, to have proof of delivery. Make sure to provide all relevant information correctly. This includes your full new address, the exact name of the insurance company, the policy number, and the address of the insured property. The date of the change of ownership, i.e., the land register entry, is a central point and must be mentioned. A copy of the land register excerpt as proof of the transfer of ownership should be enclosed with the letter. Explicitly request written confirmation of the cancellation and the date of contract termination in your letter. This creates clarity and prevents misunderstandings. A correctly written letter is invaluable here.
Deadlines and Obligations: What Buyers and Sellers Need to Know
Both buyers and sellers have specific deadlines and obligations regarding the residential building insurance during the transfer of property ownership. The seller is required to inform the buyer about the existence of the residential building insurance and to hand over the insurance documents. Both parties, or at least one of them, must promptly notify the insurer about the sale. The most important deadline for the buyer is the one-month period to exercise the special right of termination. This starts with the registration as the owner in the land register or, if later, with the acknowledgment of the insurance. If the buyer misses this deadline, the contract continues normally and can only be terminated at the next regular termination date. Seller and buyer are jointly and severally liable for the premium of the current insurance period, meaning the insurer can demand payment from both. A clear agreement on this in the purchase contract is advisable. Knowledge of these termination regulations is beneficial for both parties.
Special Case Inheritance and Forced Auction: Different Regulations
Not every change of ownership occurs through a traditional purchase. In the case of an inheritance, the building insurance automatically transfers to the heir or heirs. Unlike a purchase, however, heirs do not have a special right of termination. The contract can only be terminated at the end of the term, observing the contractual notice periods. The heir fully assumes the rights and responsibilities of the previous policyholder. Another special case is the acquisition of property through a compulsory auction. In this situation, the existing building insurance does not automatically transfer to the purchaser. The purchaser must actively take out new insurance to avoid a gap in coverage. It is advisable to look into suitable insurance options before the auction date. These distinctions are important to act correctly in each case and ensure insurance protection.
nextsure by your side: Personalised advice for optimal protection
Changing the residential building insurance when purchasing a house can be complex. At nextsure, we understand that every property purchase and life situation is unique. That’s why we offer more than just standard solutions. Our experts analyse your specific situation and the existing insurance coverage. We help you decide whether taking over the old policy is advisable or if a new, customised contract, such as one with crucial elemental damage insurance, is the better choice for your new home. We support you with all the formalities, from reviewing the old contracts to cancellation and taking out a new, tailored residential building insurance policy. This way, you can look forward to your new home with peace of mind, knowing that your property is well protected. Trust our expertise in the field of insurance.
Request an individual risk analysis now: Have your insurance situation checked free of charge and receive concrete optimisation suggestions.
More useful links
Bundesministerium der Justiz provides the full text of Section 95 of the Insurance Contract Act (VVG), which governs the automatic transfer of the insurance relationship in the event of a change of ownership.
Bundesministerium der Justiz offers Section 96 of the Insurance Contract Act (VVG), which details the right of termination for both the insurer and the acquirer.
Bundesministerium der Justiz provides information on Section 1922 of the Civil Code (BGB), which explains the universal succession, such as in inheritance law.
GDV (Gesamtverband der Deutschen Versicherungswirtschaft) publishes media information on residential building insurance, including current adjustments to the adjustment factor.
Verbraucherzentrale offers comprehensive information on price increases and the correct cancellation of residential building insurance.
Verbraucherservice Bayern provides a financial compass with detailed information on residential building insurance.
Statistisches Bundesamt (Destatis) offers official statistics and information on housing in Germany.
FAQ
Does the homeowners insurance automatically transfer to the new owner?
Yes, according to Paragraph 95 of the Insurance Contracts Act (VVG), the residential building insurance is transferred to the buyer upon the change of ownership (land register entry). This ensures seamless protection of the property.
Can I cancel the assumed residential building insurance?
Yes, as the new owner, you have a special right of termination. You can cancel the contract within one month after registration in the land register or upon becoming aware of the insurance.
Who pays the premium for building insurance when ownership changes?
The seller and buyer are generally jointly and severally liable for the premium of the current insurance period. It is advisable to have a precise agreement in the purchase contract.
What do I need to inform the insurer about when there is a change of ownership?
You should inform the insurer of the change of ownership, providing the insurance number, the address of the property, and the date of the land register entry. A copy of the land register extract should be attached as proof.
Does the special right of termination also apply in the case of inheritance?
No, in the event of an inheritance, the residential building insurance is transferred to the heir, but there is no special right of termination. The contract can only be cancelled under the usual terms.
What should be considered regarding the residential building insurance in a foreclosure?
In a compulsory auction, the home insurance does not automatically transfer to the purchaser. The buyer must arrange new insurance coverage themselves.
