When purchasing a new property there are a number of things to do including taking out buildings insurance for your new home. We often get asked when is the best time to do this.
If you are purchasing your property with a mortgage, taking out buildings insurance is usually compulsory. For example, you may be approved for a mortgage on the condition that you arrange appropriate insurance cover before the purchase.
As we know, there is a lot of things going on when purchasing a property and it is essential you don’t forget to organise your home insurance at the right time.
When to get your buildings insurance
We advise our clients to have their buildings insurance in place by the time contracts are exchanged. The exchange stage is when you legally commit to purchasing the property. Having buildings insurance in place makes sense at this stage as you have responsibility for insuring the property at this point. The seller may then cancel their home insurance by this date and yours will begin.
If having buildings insurance is a condition of your mortgage and you don’t have it in time for exchange of contracts, you could run the risk of your mortgage falling through. This could compromise everything and call the chain to collapse.
Buildings insurance is important
- It is a compulsory condition of getting a mortgage,
- The insurance will cover you in case the worst should happen. Any damage or the cost of fully rebuilding your property will be covered.
- You will also be covered if you suffer a fire, flooding or bust pipes or natural disasters.
When to organise your buildings insurance
You can arrange your buildings insurance in advance of exchanging contracts. The insurance company will ask you to choose the day you would like the policy to start. If you liaise with your solicitor, you can find out the date of exchange and schedule your policy to start then. This ensures you have plenty of time to research the best quote and compare prices with other providers.
Having the right level of cover is also important. Your insurance needs to cover every penny of the cost of fully rebuilding your home, if that needed to happen. You might also have the option to transfer your current buildings insurance to your new property without having to switch insurance company.
Building insurance on a new build
New build properties usually come with a warranty which can provide protection for two years and any problems with structure for up to ten years. Most mortgage lenders however will still require you to take out buildings insurance on a new build. It is still a sensible idea to do so! Sometimes, buyers of new builds may find it hard to get buildings insurance on their new build because the postcode is not on the insurers’ systems. If this is the case, you will need to speak to the builder/developer and make sure the postcode has been registered. You will then need to find an insurance company who has recently updated their system. This may take some time so leave plenty of time to organise this.
If you have any questions about buildings insurance when you purchase a new property, please get in touch. Alternatively, you may find additional information by contacting our partners Source to discuss the options available to you.