Buying a home? Congrats! We know that insurance is a boring topic, but it’s really important to make sure your fabulous new pad is as protected as it can be. Plus, getting it sorted is a lot more straightforward than you might think!
Here, we’ll explain when to get buildings insurance if you’re buying a house, and why it’s something you need. But first…
What is buildings insurance?
Buildings insurance is a kind of insurance that protects your home. You have to pay a set amount of money each month or year, known as your premium. In return, if your home gets damaged, your insurance provider (the people that give out insurance) will pay to repair or rebuild it.
There are actually 2 types of home insurance, and buildings insurance is just 1 of them. Buildings insurance protects your home’s structure, as well as its permanent fixtures and fittings (things like windows, floors and sinks). Meanwhile, contents insurance protects the things you keep in your home (anything from electricals to furniture and jewellery).
Imagine someone picked up your house and shook it upside down. As a general rule, buildings insurance covers everything that would stay put, while contents insurance covers everything that would fall out.
You can also get something called combined insurance, which is buildings insurance and contents insurance rolled into 1. If you need both, combined insurance is often cheaper than getting both types of cover separately.
Do you need buildings insurance if you’re buying a house?
Buildings insurance isn’t a legal requirement but most people who buy a house do need it (not to mention the fact that it’s really useful!).
Why? Well, most mortgage lenders (the people who give out mortgages) will only give you a mortgage if you get buildings insurance. That means, unless you have enough money to buy a house without a mortgage, you’ll need to get it.
That said, even if you don’t need a mortgage, we’d still recommend getting buildings insurance (and preferably, contents insurance too!). Your property will probably be the most expensive thing you own. So, imagine how you’d feel if something happened to it! Not only would you lose your home, but you’d lose all the money you’ve put into it as well.
Buildings insurance will give you peace of mind that if something happens to damage or even completely destroy your home, you’ll get the money you need to repair or rebuild it.
Do you need buildings insurance if you’re a leaseholder?
There are 2 main ways you can own a property in the UK: freehold and leasehold.
If you own the freehold of a property, that means you own the building and the land it sits on. This applies to nearly everyone who buys a house (although there are some exceptions). And it means you’ll need to sort out your own buildings insurance.
On the other hand, if you own the leasehold, that means you own the property but not the building or the land. Basically, you’re purchasing the right to live in the property for a set number of years. You’ll normally be a leaseholder if you’re buying a flat.
If you’re a leaseholder, you won’t normally need to get buildings insurance (although it’s important to check the lease to make sure!). That’s because buildings insurance will be the responsibility of the freeholder. However, you will usually have to pay a yearly fee, known as the service charge. This will contribute towards the costs of looking after the building (which will normally be managed by a managing agent) – including the cost of buildings insurance.
That said, not everyone who owns a flat is a leaseholder. Sometimes, you’ll get a share of the freehold, which means you’ll jointly own the freehold with the people who own the other flats in your building. In this case, you’ll need to work with them to make sure there’s buildings insurance in place, which will normally mean splitting the cost between you.
When do you need buildings insurance to be in place if you’re buying a house?
If you’re buying a house, you’ll normally need to have buildings insurance in place when you exchange contracts.
Exchanging contracts is the moment when you become legally committed to buying the property. Up until this point, either you or the seller could pull out of the sale at any moment. But after you’ve exchanged contracts, you’re legally obliged to go ahead and buy it (and the seller is legally obliged to go ahead and sell it to you!).
Normally, you’ll exchange contracts around 1 to 2 weeks before all the money goes through and you get the keys (called completion). But it could be longer or shorter depending on what you agree with the seller.
Anyway, exchanging contracts is usually the time when the building will stop being covered by the seller’s buildings insurance. It’s important to make sure your cover starts at this point so that there aren’t any gaps in the building’s protection.
Not only that, but if you’re getting a mortgage, this is the moment where your mortgage lender will require you to have buildings insurance in place. If you don’t, your lender could refuse to give you your mortgage, which could end up delaying or even stopping the property sale completely. Obviously, that’s something to avoid!
When should I get buildings insurance when buying a house?
Okay, so here’s the thing. Just because you have to have buildings insurance when the contracts are exchanged, that doesn’t mean that exchange day has to be a mad rush!
Instead, most buildings insurance providers will let you buy your buildings insurance in advance and choose what day you want it to start. In fact, it’s usually cheaper this way too. Buying your home insurance 3 weeks before you want it to start can save you over 20%!
Your conveyancer (the person who’ll be helping you to sort out the legal side of buying a house, known as conveyancing) will normally let you know what date you’ll be exchanging contracts ahead of time. Once you know what date it’ll be, you can go ahead and sort out buildings insurance.
All you have to do is tell your insurance provider what date you’ll be exchanging and voila! Your cover will start on the right day without you having to do anything more.
Just remember that exchange dates can change and house purchases can fall through (although we’re crossing our fingers that yours goes totally smoothly!). If that happens, make sure to tell your insurance provider your new exchange date or cancel your insurance if you don’t need it anymore. You don’t want to end up paying for insurance you don’t need!
How to get buildings insurance
Once you know that exchange day is approaching, it’s time to go ahead and get that buildings insurance sorted. But what exactly do you need to do? Just follow these simple steps.
1. Work out your home’s rebuild value
When you get buildings insurance, you’ll need to tell your insurance provider how much cover you want – in other words, the maximum amount of money you’ll need them to pay you if your home gets damaged.
One common mistake is insuring your home’s market value (how much it’s likely to sell for) instead of insuring its rebuild value (how much it would cost to rebuild if it was knocked down). Funnily enough, it costs much less to rebuild a home than it costs to buy one, as the land it sits on is actually worth more than you might think. So, it’s important to insure its rebuild value rather than its market value, to avoid paying more than you need to.
To get a rough idea of your home’s rebuild value, you can use the Association of British Insurers' calculator.
2. Decide what kind of home insurance you want
Now, obviously, you need buildings insurance. But it’s a good idea to consider contents insurance as well.
Contents insurance covers all the belongings you keep inside your house, like your furniture, TV, dishwasher and jewellery. If something happens to your building, like a flood or a fire, the chances are your belongings will get damaged too. And replacing all your belongings is likely to cost a lot more than you think.
If you want to cover both your building and your belongings, you can either get 2 separate policies (your policy is a fancy word for your insurance contract). Or, you can get both rolled into 1 with a combined policy. Although it’s worth checking both and comparing the prices, a combined policy will normally be cheaper than getting both types of home insurance separately.
Plus, it’s normally a lot more convenient. If there’s an accident that causes damage to both your building and belongings, you’ll only have to report the damage to 1 provider instead of 2. And it will avoid arguments where you have 2 insurance providers who are both claiming that the other should pay!
Note: Often, your belongings will add up to much more than you think. If you’re getting contents insurance or combined insurance, make sure you don’t underestimate how much your belongings are worth as this could lead to you not getting enough money if something happens to them.
3. Check the top comparison sites
Now that you know what you’re looking for, it’s time to start hunting for deals. The first place we’d recommend looking is the top comparison sites. They’ll take a few details from you before showing you lots of different deals from lots of different insurance providers, so that you can compare them and find the best one for you.
In an ideal world, we’d recommend checking all 4 of the top comparison sites, as they’ll each show you slightly different deals. However, if you’re in a rush, you can just check the top 1 or 2. We’ve ordered them in terms of range of insurers searched and speed, to make things super easy!