There’s lots to think about when buying a home, but buildings insurance is really important if you don’t want a house sale to fall through.
There are a great number of things to do when buying a home. Your solicitor or conveyancer will sort out most of these, including drawing up contracts and handling other legal paperwork. But there are some crucial steps you must take yourself, such as taking out buildings insurance for your new home.
If you are buying your property with a mortgage, taking out buildings insurance is usually compulsory. You may be approved for a mortgage, but only on the condition that you arrange appropriate insurance cover ahead of the purchase.
Timing is crucial when it comes to moving house, especially if you’re in a chain. You don’t want to do, or forget to do, anything that could hold things up. This is why it’s crucial to get your home insurance sorted at the right time.
As the buyer in a property purchase, you are required to have appropriate buildings insurance in place by the time that contracts are exchanged. Exchange is the point at which you legally commit to purchasing the property, so it makes sense that you will also assume responsibility for insuring the property at this point. The seller’s home insurance will usually be cancelled by this date, and yours should kick in.
If you fail to arrange buildings insurance cover by the time contracts are exchanged, you could risk your mortgage falling through. This could compromise the whole purchase, and perhaps even collapse the chain - so it’s well worth getting organised.
There are other important reasons to get buildings insurance besides it being a compulsory condition of getting a mortgage. In fact, it’s one of the most important things to consider when buying a house.
This kind of home cover provides you with a crucial safety net just in case the worst should happen. It covers the whole structure of your property, from the walls, floors and roof to garages, sheds and fences. Permanent fixtures and fittings are also included, such as drains, cables and pipes.
If the worst should happen, your buildings insurance will cover the cost of any damage - or the cost of fully rebuilding your property. This is absolutely essential, as it ensures you won’t be left without a home or saleable asset, or left out of pocket trying to rebuild out of your own funds.
Buildings insurance can be a real lifeline if you suffer a fire, flooding or burst pipes. It also provides protection against natural disasters, collisions from vehicles or aircraft, subsidence, fallen trees and lampposts, and many other unlikely but possible situations.
You don’t need to scramble to get a new insurance policy up and running on the day of exchange itself. It’s far easier and less stressful to line one up in advance. Insurance companies usually permit you to choose the day that the policy will start. So, by liaising with your solicitor, you can find out the date of exchange and schedule your policy to start then.
This gives you plenty of time to do your research, getting quotes and comparing prices. You can ensure you have the right level of cover, at a price that works for you. Doing all the groundwork in advance is a really smart move, so there’s no panic or stress as the exchange date approaches. You’ll have everything lined up and ready to go.
It’s very important to get the right level of cover. Your insurance needs to cover every penny of the cost of fully rebuilding your home, if it ever came to it. There’s lots of advice and tools to be found online to help you work out this cost, including a handy online calculator on the Association of British Insurers’ website.
Your mortgage company may recommend its own insurer, but you don’t necessarily have to use it. You can choose your own, but the lender is within its rights to reject your choice if it isn’t on their list of approved insurers.
You may also be able to transfer buildings insurance from your current property to the new one, without having to switch insurers or take out a new policy. You’ll need to contact the insurer with all the relevant details of the new property, and arrange for cover to start from the date that contracts are exchanged. Make sure to check that your existing property will still be covered, either by your own policy or by the buyer’s, if you’re in a chain and have exchanged contracts.
Most new build properties come with a warranty. This can provide protection from defects in the build for two years, and problems with the structure for up to ten years. But does this mean that you don’t need buildings insurance as well?
What you’ll find is that most mortgage lenders will still require you to take out buildings insurance on a new build. Even if it wasn’t compulsory in order to get a mortgage, it’s still a sensible idea to take out buildings insurance. While the warranty on your new build provides some protection, it doesn’t cover everything. Owners of new builds also find that developers and builders are not always as willing as they should be to honour the warranty to the letter.
On a final note, buyers of new build properties may experience some issues when trying to get buildings insurance. This is often because the property is so new that the postcode isn’t on the insurers’ systems. If this happens to you, you’ll need to speak to the builder or developer and make sure that your postcode has been registered. You’ll then need to find an insurer who has recently updated their system. It can take some time to get it sorted, which is why it’s always worth starting early.