Why cover stops
Two independent rules produce the same outcome. The doctrine of insurable interest requires a policyholder to hold an active financial stake in the property insured; once title has passed, the seller no longer has one. Separately, virtually every commercial property and general liability policy contains a no-assignment clause, so even a willing seller cannot simply hand the contract to the buyer.
How it is handled at closing
- The buyer binds their own property and liability cover effective on or before the closing date.
- A lender will require an active certificate of insurance naming it as additional insured and loss payee or mortgagee before it funds.
- The seller cancels as of the sale date and receives a prorated refund of unearned premium.
The exception that is not an exception
Where the transaction is a sale of the owning entity rather than of the real property, the policy technically remains in that entity's name. This is often mistaken for cover travelling with the building. It does not: most policies carry change-of-control provisions requiring the insurer to be notified, and a failure to disclose new beneficial ownership can void the cover at precisely the moment it is needed.
Why this is an intelligence problem
The need for a new placement is created by an event in the public record — a transfer, a recorded transaction, a change of control, sometimes only a listing. The broker who hears about it first is usually the one already in the room. Reading those events as signals, with the evidence behind them, is the difference between being told and being early.
The building does not change. The person with an insurable interest in it does.