Home insurance for new builds: a simple guide
From lower heating bills to immaculate kitchens, new-build homes offer lots of benefits. If you’re buying one, you’ll need to make sure it’s properly insured. This is our guide to insuring your new build property.
Frequently asked questions
Why would I need to insure my new build?
More people are buying new homes – 217,350 were built in the 2016/2017 financial year, which is 74% up on four years ago.
New homes offer lots of benefits, but they aren’t tried and tested. So, once you move in and start using things, you might come across a few problems – leaking showers, poor tiling, that kind of thing.
And to make sure you’re covered for repairs you should confirm that your builder is registered with the National House-Building Council (NHBC) because damage due to poor or faulty workmanship often isn’t covered under a home insurance policy.
What is the National House-Building Council (NHBC)?
The National House-Building Council (NHBC) offers the Buildmark Certificate, a 10-year warranty for new homes and new conversions. This means your builder must rectify any problems found in the first two years of the building being used, such as a leaking shower, but nothing that could be simple wear and tear.
The following three to 10 years are covered for structural problems resulting from the build – which includes the roof, floor, staircases, windows and doors.
NHBC Buildmark also covers you if you’ve exchanged contracts and the builder goes bankrupt before your property is finished.
What happens if my new house doesn’t have an NHBC Buildmark Certificate?
Around 20% of builders don’t register with the NHBC, so there’s no guarantee that you’ll have a Buildmark Certificate. If not, you’ll want to ask your builder why they haven’t registered with the NHBC. They may have legitimate reasons – perhaps they’re a small company and can’t afford the fees – but it’s a good idea to find out what these reasons are.
If you still want to go ahead and buy the house, you’ll need to take out your own new build insurance. Lots of companies offer 10-year policies like the NHBC. You could negotiate with the builder and have them pay for it.
The cover should protect you for the cost of any repairs. You may even find that your mortgage company requires it as a condition of the loan.
Can I get the Buildmark Certificate on a new conversion?
Yes, if you are buying a newly converted property you may be able to get a Buildmark Certificate. The cover will give you reassurance that you’ll have protection if problems arise in the future. But be aware that sometimes on conversion properties Buildmark will add some exclusions to the cover - these will be printed on your insurance certificate. It is possible that your lender won't require you to have Buildmark cover, so if the property doesn't have the certificate you should consider whether you want to get one.
I am moving into a home that was a new build and is only a couple of years old. Is the cover transferable to me?
Yes, the Buildmark Certificate covers the property, rather than the owner and is fully transferable during the lifespan of the certificate. So whether you are buying or selling a home with a Buildmark policy which is still in force, the new owner benefits from any remaining cover. Ideally, the policy documents should be handed over on completion.
What level of cover do I have with Buildmark?
The most Buildmark will pay out is the original purchase price of the property as shown on the insurance certificate, up to a maximum of:
- £1,000,000 for a newly-built home (up to a maximum of £25 million for all homes in a continuous structure) or
- £500,000 for a converted home (up to a maximum of £5 million for all homes in a continuous structure).
The limits are increased on each anniversary of the completion date by 5% of the original limit to allow for inflation. Buildmark then deduct amounts what it has paid or is going to have to pay for claims it has accepted. You can see full details in the Buildmark Policy Document.
There isn't any kind of excess on the policy, so you don't have to pay towards any claim that is accepted. However, there is a minimum claim value shown in the documents.
Do I still need buildings insurance for my new build?
Yes. Your mortgage provider will usually require you to have buildings insurance as part of gaining the loan. You aren’t required to have it if you own your home outright, but it’s a good idea to – otherwise you won’t be covered if flooding, fire or subsistence damages the building.
What about home contents insurance?
Again, yes. NBHC, or buildings insurance won’t cover you for theft or accidental damage of the contents of your home – so you’ll need to make sure your contents are covered. It’s usually cheapest to buy a combined buildings and contents policy rather than buying them both separately.