If you purchase a property at auction you are likely to see the following terms:
“Purchaser shall be responsible for obtaining physical possession of the property and assumes the risk of loss or damage to the property from the date of sale forward. ”
This is a good test to see the quality of your insurance agent. The first agent I called said I could not insure the house because I did not own it. Well of course you can insure the house. When you put a property under contract you have what is known as “Equitable Interest” in the property, and an equitable interest is an insurable interest.
Equitable interest means you have some rights in the property but you do not have legal title. Another example of equitable interest would be in the case of a trust. The trustee has legal ownership of the property but the beneficial interest in the trust would have equitable interest in the property.
This may not be important if you only have a $100 deposit on the line. However in an auction you may be legaly liable for the full auction price even if the property burns down. Make sure you get that property insured and don’t let the agent tell you that you can’t do it.