Should you worry about hazard insurance on a property before you actually take title? By all means! Although the purchaser may not be the record owner, he has an insurable interest as soon as the agreement of sale is executed by both the buyer and seller. As a matter of practice, however, buyers do not usually place insurance until papers pass and it should not be necessary if the agreement of sale is properly drawn. Most agreements provide that the property will be insured for a specific amount and this is very important in the interest of both parties.

From the buyer’s point of view it is important that an adequate sum be stipulated and the agreement not read “as now insured” which is an all too common practice and usually indicates that the seller does not want to bother to increase his insurance.

As a rough pile of thumb the amount of insurance on the buildings should equal the sale price less the value of the lot.