If you're buying a home or taking out a mortgage, you'll need to consider insurance. Find out about home insurance for home buyers and how to get quotes.
What insurance do I need when buying a house?
Buying a house is a big decision and things don’t always go smoothly. Depending on your situation, there are several different types of insurance you may want to consider.
If you need a mortgage, your lender will usually require buildings insurance to be in place from the exchange of contracts as a condition of the loan. But even if you’re buying the house outright, it’s important to cover your property.
You should also consider contents insurance to cover all the possessions kept in your home when you move.
If you’re new to the house buying process, you can get first-time buyer insurance which is simply buildings and contents insurance tailored to people buying their first home.
And whether you’re a first-time buyer or not, you might also want to consider home buyers protection insurance. This can help you claim back the costs involved with buying a house - like surveys, conveyancing fees, and mortgage fees - if the sale falls through.
- Home buyers' protection insurance can help you claim back the costs of buying a house if your sale falls through
- If you’re a first-time buyer taking out a mortgage, the lender will require you to take out buildings insurance
- You should have buildings insurance in place by the time you exchange contracts
- Taking out contents insurance early can also cover your possessions when you’re moving in, in case they get broken or lost during the removal process
Why do house sales fall through?
If you’ve found the ideal home to buy, you won’t want anything to get in the way. But house sales don’t always go to plan and unfortunately, around 35% of them fell through in 2022 according to Quick Move Now.
Common reasons for property sales falling through include:
- The seller pulling out of the sale
- Gazumping - when the seller accepts a higher offer from someone else after accepting yours
- The lender valuing the home as less than the offer you’ve accepted
- The buyer pulling out because of a change in their circumstances
- The survey highlights that the property needs essential work
- Your mortgage offer expires
- Conveyancing delays
- When someone else’s sale falls through and causes the property chain to collapse
Taking out home buyers protection insurance can help you to claim back some of the costs if buying your new home doesn’t go to plan.
Is home buyers protection insurance worth it?
There are a surprising number of costs involved when you’re buying a house, and that’s even before you have to pay the deposit.
If your sale fell through, it could reimburse you for:
- Conveyancing fees
- Survey and mortgage valuation fees
- Mortgage arrangement fees
- Costs for accommodation and storage
- Gazumping protection (if the other offer was £1,000 or more than yours, for example)
What doesn’t buyer protection insurance cover?
Home buyer protection is designed to cover typical situations that might cause your sale to fall through.
But some circumstances insurers won’t cover include:
- If sealed bids are being used for the house sale
- If you knew the sale was going to fall through before you bought home buyers protection
- You pulled out of the sale because of reasons not covered by the policy
- If you had a survey done on the property before you took out cover
- You voluntarily pulled out of the sale
- Any costs you paid out for before buying the policy
- If you took voluntary redundancy - so you can no longer go ahead with the purchase
- If the sale fell through due to flooding when the property is in a flood-risk area
When should I purchase home buyers insurance?
If you want the extra reassurance of home buyers protection insurance, you should take it out as soon as you decide to buy a property and before you organise or pay for any services, like surveys.
Whereas you’ll need to have buildings insurance in place before you exchange contracts on your new home.
Once you’ve exchanged, you’re legally responsible for the property even if the sale hasn’t completed. So most lenders insist you have buildings insurance by the time you exchange.
Contents insurance won’t be a condition of the mortgage, but it’s best to buy this before you move in, so your things will be covered during the moving process.
What’s first-time buyer home insurance?
First-time buyer home insurance is just buildings and contents cover if you’re buying your first home.
You can buy buildings and contents insurance separately or together as a single policy.
Home insurance compensates you if something unexpected happens, like a theft, fire or flood, so that you can replace your belongings or repair your home.
Do homeowners need home insurance?
Whether your first home is a house or flat, when you buy a property, you’ll need to consider home insurance.
If you’re taking out a mortgage to buy a house, your mortgage lender will require you to get buildings insurance - they’ll want to know their investment is protected until you’ve paid off the loan.
If you're buying a flat or other leasehold property, buildings insurance is often the responsibility of the landowner or freeholder. But your lender will still want evidence that the property's insured. Your conveyancer should take care of this for you.
Even if you don’t need a mortgage to buy your home, it’s still a good idea to take out buildings insurance. You’ll need to think about how you’d pay for repairs, or even a rebuild, if your home was damaged by an unforeseen event – like a flood, fire or storm.
Whether you insure the contents of your home is up to you. But again, think about how you’d pay to replace your belongings if you had to - their total cost can be more than you realise.
What does home insurance cover?
The two main types of home insurance cover different aspects of your home - the structure of your home and the possessions inside it.
Buildings insurance covers the structure of your new home, including the walls, roof and floors, against any unexpected damage.
Your permanent fixtures and fittings will also be insured - for example, doors and windows, fitted kitchens and bathroom suites.
Essentially, this type of home insurance covers anything that’s fixed down.
Most policies will also pay the cost of emergency temporary accommodation if you can’t live in your home because of the damage that’s been caused.
Contents insurance covers the cost of repairing or replacing the contents inside your home if they were to get damaged, destroyed or stolen.
Your policy will cover possessions and valuables like electricals, appliances, clothing and furniture. Basically, anything you might take with you when you move home.
Individual items will only be covered up to a certain amount. This is called a single-item limit - for most insurers, this limit is £1,000.
Items worth more than this will need to be listed separately on your policy if you want cover for their full value.
Home insurance will usually cover:
- Fire damage
- Storm and flooding damage
- Falling trees
- Burst pipes
- Theft and burglaries
When should first-time buyers get home insurance?
Whether you’re a first-time buyer or not, the timings for getting home insurance in place are the same.
You should make sure your buildings insurance policy has started by the time you exchange contracts.
It’s also a good idea to buy contents insurance before you move into your first home. If your belongings are damaged or lost while you’re moving in, most insurers will provide cover provided you’re using a professional removals company.
Do I have to buy insurance through my mortgage provider?
Although you need to have buildings insurance to get your mortgage, you don't have to buy it from your mortgage provider. You may get a better deal elsewhere.
You can buy your home insurance through any insurance provider. And you can even buy contents and buildings cover from separate insurance companies. But sometimes you can get a better deal if you buy both types of insurance together from the same provider.
As always with insurance, it’s best to compare policies and providers - and take a close look at any exclusions - to make sure you get the right cover.
How much should I insure my new property for?
The amount of cover you’ll need will depend on how much it would cost to rebuild your property from scratch. This is not the same as how much you paid for your home.
You should be able to find your home’s rebuild cost on your mortgage valuation report or your surveyor’s report. You can also use the free rebuilding cost calculator from the Association of British Insurers.
Being insured for the right rebuild amount on your buildings insurance policy can save you from having to pay for any shortfall if damage meant your home had to be rebuilt.
How much is home insurance for first-time buyers?
As a first-time buyer, you won’t have to pay more for home insurance than other people. Your quotes will depend on how likely the insurer thinks it is that you’ll make a claim, the value of your building and the level of cover you choose.
The cost of home insurance will also depend on where you live and what the crime rate is, along with factors like the risk of flooding and subsidence.
The average price paid by GoCompare customers for a combined home insurance policy in April 2023 was £172 a year.
What other insurance do I need if I'm buying a house?
As a new homeowner there are some other types of insurance and add-ons you may want to consider:
Goods in transit insurance - This can cover your possessions in case they get lost, damaged or stolen while they’re being moved. Check whether your contents insurance already covers this - although you’ll usually need to use a professional removals contractor.
Storage insurance - Most storage companies require you to have insurance before they’ll store your items. But home insurance doesn’t always provide cover for your belongings away from home. So you may need to buy this as a policy add-on or as separate cover.
Accidental damage - This can be a policy add-on and covers you for unexpected damage in the home like a smashed window or spilled paint on the carpet. You can also get accidental damage cover for your building.
Personal possessions cover - Standard contents insurance only covers your belongings when they’re in your house. This type of cover protects your possessions against being lost, stolen or damaged when you take them away from home.
Legal expenses cover - This type of insurance is a standard feature with many home insurance policies or can be an optional extra. It can help cover legal expenses - for example, personal injury claims and boundary disputes with neighbours.
Home emergency cover - While home insurance covers you for damage caused by unexpected events, this can help with urgent issues relating to gas, electricity and water, covering the cost of call-out fees and emergency repairs.
Mortgage payment protection insurance - This type of policy can cover your monthly mortgage payments if something unexpected happens to you. It can pay out for circumstances like serious illness, injury, or involuntary redundancy, that might leave you unable to make your payments for a time.
Life insurance - Mortgage life insurance is designed to cover the amount that’s left to repay on your mortgage if you die unexpectedly. Also known as a decreasing term policy, the sum that can be paid out will reduce over time as the mortgage amount decreases.
Frequently asked questions
Although most new build homes come with a warranty - this usually only covers you for the work the builder has carried out. So, mortgage lenders will still require you to have buildings insurance.
Taking out your own separate buildings insurance means your home can also be covered for unexpected damage from events like storms, fire, and flooding.
Sometimes, new build properties have a postcode that isn’t on insurers’ systems which can make it difficult to buy home insurance. If this happens, you’ll need to speak to the builder or developer to make sure your postcode is registered.
This largely depends on your insurer. You might be able to transfer your policy to your new home. But as insurers base their premiums on factors like the type of home you live in and its location, you may find your premiums go up. Either way, you’re likely to need to pay an admin fee to change your details.
It’s not a legal requirement to have home insurance. But you need to think about how you’d cover the costs if something happened to your home or its contents. Without cover in place, the amount you’d need to pay to repair your home or replace your things (if you faced a situation like a fire, flood, storm, or burglary) could be very high.
You’ll be in a property chain if you need to wait for your seller to buy another home before you can move. The more houses involved, the more chance there is of a sale falling through and breaking the chain - potentially leaving you without a home to buy.
Although you can’t fully prevent the chain from breaking, there are some steps you can take to help things go smoothly:
- Consider buying a new build property
- Avoid buying a home in a long chain
- Use a good conveyancer or solicitor that can keep things moving
- Put your property up for sale at a realistic price that will encourage buyers
- Consider selling your home first and moving in with family or renting until you can buy
- Be honest about any problems with your home so the survey won’t reveal any surprises
- If you’re selling your home, try waiting until you have a first-time buyer or cash buyer
- Take out home buyer protection insurance to cover your costs if the sale does fall through