Exchanging contracts and buildings insurance
At what stage in the house-buying process do you need to insure your new home? Here’s what you need to know about buildings insurance when you exchange contracts.
At what stage in the house-buying process do you need to insure your new home? Here’s what you need to know about buildings insurance when you exchange contracts.
I’m buying a house. When do I need to have buildings insurance in place?
The house you’re buying becomes your legal responsibility as soon as you exchange contracts with the seller. That means you should arrange for your buildings insurance policy to start from this date.
Your mortgage company may insist on it too.
Related articles
Can I wait until I move in to buy buildings insurance?
It’s not advisable to wait until then. If the house burns down or is flooded between exchanging contracts and your moving date, you’re still committed to buying it. This is why buildings insurance when buying a house is important.
Imagine how devastating it would be to find that the cost of rebuilding would need to come out of your own pocket. Getting buildings insurance from the moment you exchange contracts offers you the cover you need.
Do I need temporary home insurance between exchange and completion?
To protect your financial interest, you need insurance – but whether you opt for temporary insurance or start your buildings insurance policy from completion date is up to you.
There are specialist policies that offer short-term buildings insurance between exchange and completion. Make sure you tell the insurance provider whether the property is vacant or still occupied by the seller, plus the planned completion date.
A temporary policy can have some advantages. It could make it easier to have a combined buildings and contents policy starting on the same date. You might also avoid the issue of altering your home insurance policy to include contents on completion – or paying for contents insurance that’s not needed.
If you opt for a standard policy, you’ll need to make it clear to the provider that you’re not living in the property yet.
Is buildings insurance a legal requirement?
You’re not legally required to have buildings insurance – although your mortgage provider will usually insist that you have it – but it may be one of the conditions of sale in the exchange contract.
You don’t have to buy your buildings insurance from your mortgage provider, though. You should choose the policy that suits your needs best.
If you don’t have a mortgage, there’s no obligation for you to have buildings insurance. But unless you can comfortably cover the cost of rebuilding your house or repairing it if it’s damaged, it should be seen as an essential.
Your solicitor may ask you for proof that the property is insured. This is because the standard conveyancing wording recommended by the Law Society, in the Standard Conditions of Sale (5th edition), puts the responsibility of arranging buildings insurance between exchange and completion of contracts on the purchaser of the property.
Do I need buildings insurance if I’m a leaseholder? Or is this the freeholder’s responsibility?
It depends on your lease. Some freeholders buy buildings insurance for the whole property and have leaseholders pay their share through the service charge. But this isn’t always the case, so check your lease.
If in doubt, ask the freeholder over email so you have a written record. Do this early enough so that you can get insurance in place for when you exchange, if needed.
To find out more about the responsibilities of home ownership, read our guide to the differences between leasehold and freehold.
Do I need buildings insurance for a new build?
If you’re buying off-plan or a new-build property, then your home will typically come with a warranty. But you’ll still need buildings insurance. While the warranty can pay for repairs to defects and structural issues for a specified number of years, it won’t provide the same protection as buildings insurance so won’t cover you for fire and flood, for example. Buildings insurance will need to be in place when you exchange contracts.
Find out more about new build home insurance.
What does buildings insurance cover?
Buildings insurance covers:
- Your home’s structure (walls, windows and roof)
- Outside fixtures (fences, sheds and garages)
- Permanent fixtures and fittings (including the bathroom suite and kitchen units).
Buildings insurance will protect you from:
- Fire, floods, storms
- Vandalism
- Frozen or burst pipes
- Subsidence and/or heave
- Fallen trees or lamp posts.
When should I start looking for homeowner’s insurance?
To avoid the stress of searching for insurance on the day of exchange, it’s better to arrange buildings insurance in advance. You can choose the date when the policy will start so that you have buildings insurance on exchange. Once you find out when you're exchanging contracts, you can arrange for cover to begin that day.
Ideally, give yourself time to do your research so you can compare quotes. That way, you can make sure you find the right level of cover for your new home, at the right price.
How to arrange buildings insurance before exchange
Make sure you have the details of the home you’re buying to hand, including:
- When your home was built
- If it’s made from standard materials such as brick and tiles or is non-standard
- If the property has suffered from cracks, subsidence or ground movement
- If the property is close to tall trees or water
- If it has been flooded
- If any building work is taking place.
We can help you with a quote forhome insurance, but you might also want to look at specialist policies to compare your options.
What if the insurance provider asks questions I can’t answer?
You should be able to answer any questions by looking at your survey, or your solicitor or conveyancer may be able to help. You could also ask your estate agent to check with the seller. Don’t guess, as this could invalidate your policy when you come to claim if the information is inaccurate.
What should I consider when buying buildings insurance?
When looking for buildings insurance, consider:
- The excess – the amount you have to pay towards any claim you make.
- If you’re not moving in straight away because you’re having building work done, tell your insurance provider in advance about the planned work.
- Whether the policy covers you for alternative accommodation should you need to stay somewhere else if your home is damaged by fire or flood, for example.
- If the policy provides cover for tracing and accessing a leak and for clearing blockages in sewage pipes.
- If you’re thinking of renovating your new house – or adding an extension or loft conversion – don’t forget to review your buildings insurance afterwards, as the rebuild cost of your home will probably increase.
You might also want to consider extras like cover for:
- Loss or theft of keys
- Legal expenses cover
- Accidental damage.
How much should I insure my new home for?
Your buildings insurance needs to cover the cost of rebuilding your home, not its market value. For more information, read our guide on how to calculate the rebuild cost of your home. When you have your homebuyer’s survey done, you can ask your chartered surveyor to carry out a rebuild estimate at the same time.
If there is property damage between exchange and completion, who is liable for repairs?
If the property sustains any damage after you’ve exchanged contracts – let’s say a fence blows down or a window is broken – the seller must tell you about it. However, it’s your responsibility to carry out any necessary repairs, which is why you need to make sure you’re properly insured.
What happens if the seller removes fixtures and fittings?
If you find something’s been removed that shouldn’t have been, contact your solicitor. The seller is legally bound to leave all fixtures plus any fittings they agreed would be included in the sale, such as curtains or carpets.
Can I transfer my existing home insurance policy?
You’ll need to talk to your existing provider to see if they’re happy to do this. You might need both properties insured for a period.
You may need to pay a different premium. Your new home’s location, size and rebuild cost might impact the price.
Like this?
Then you'll like these...
Anna McEntee – Home, travel and pet insurance expert
Anna’s all about delivering fantastic insurance products at a great price. Value is the most important thing for Anna, as she cuts through the jargon and finds what’s most important and worth your hard-earned money.
Rachel Lacey - Insurance and money expert
Rachel’s a self-confessed money nerd who’s been writing about personal finance for more than 20 years. She spent 17 years writing for Moneywise, including a few years as Editor, and likes making complicated subjects like insurance, pensions, investing and tax, easy for people to understand.