Insurance is one of the most important parts of good financial planning. One inescapable fact of finance is that you can’t plan for every eventuality. Sometimes bad things happen, and you must find ways to deal with them. Insurance is your tool for making sure that a freak accident does not cost you financial stability for the rest of your life.

If you are selling a home, some homeowners can be tempted to cancel their insurance early. Make sure that you discuss with your agent and your lawyer exactly when you can cancel your insurance policy on the property. Typically, you should not do this until ownership has been legally transferred. Even if you have signed a contract so that neither party can back out of the sale, you must absolutely keep your insurance current. Should a disaster occur, you could be put in an incredibly bad legal position.

When buying, you will need to make sure that you have an insurance policy ready to take effect when you finalize the transaction. If coverage lapses between papers being signed and damage being done, you could end up on the hook for the bill but without a functional property. Additionally, insurance inspections and assurances can help you feel peace of mind that you will not discover any huge and expensive surprises upon moving into the property. Finally, you may not even be able to secure your loan If you cannot assure your creditor that the property is and will be insured.

So, if you are buying a property, you first will need to discuss with your lawyer or agent about when you will legally be responsible for the property. Once you have a date you are certain about, you should do everything in your power to make sure that insurance will kick in on or before that date. Work together with the seller to make sure that you have all of the information you need so that you will not end up holding up the sale. An honest seller will be happy and interested in making sure that you have all the tools you need to proceed with he sale in good faith.

Finally, it can be a good idea to consider purchasing a home warranty, which can help cover damages in the property. Do some research, and figure out if this is right for you.