A simples guide

Do I have to get buildings insurance from my mortgage provider?

If you’re in the midst of house buying you’ve probably got a lot on your plate and you probably don’t need something else on your ‘to do’ list. So we’re guessing you might not have even thought about getting your buildings insurance in place and ready to go for the day you move – you might even feel moving day is just too far off to even contemplate it. But hear us out, it could save you money – bet you’re interested now aren’t you?


Do I need buildings insurance?

If you have a mortgage, you’ll probably be expected to have buildings insurance. It means that if your home is damaged as a result of an insured event (such as flood, fire, storms and subsidence) then it will be repaired. In most cases, taking out buildings insurance will be a condition of your mortgage. It’s added security for the lender so that they’re confident that should anything happen, their financial investment in your home, is safe.

If you don’t have a mortgage (lucky you) then you’re not required to take out buildings insurance. But, you probably should – unless of course you have a big pot of money and you want to use it should anything happen to your house.

You should make sure that your buildings insurance is in place for when you exchange contracts. As the property then becomes your responsibility.

flooded house
piggy bank and house

So do I have to get buildings insurance from my mortgage provider?

In a word – no. Some mortgage lenders do include buildings insurance as part of the actual mortgage package. But if they don’t and it’s a separate agreement they may try and sell you a policy but you’re under no obligation to buy it from them. You should note that your mortgage provider can reject your choice of buildings insurance if they feel the level of cover isn’t adequate but you’re still free to choose an alternative.

It used to be that you did have to buy buildings insurance with your mortgage but that changed after the Office of Fair Trading ruled it was unfair and that customers should be allowed to choose insurance from wherever they fancied. But despite the ruling a whopping 1.5 million people have their buildings insurance with their mortgage provider because they think they have to in order to secure their mortgage. A further 2.83 million people admitted they had their buildings insurance with their mortgage provider because it appeared to be the easiest option. But taking the easy route or not knowing your rights, could be costing you money. And it doesn’t have to hard either to find an alternative insurance provider – by the time you’ve sat down, had a cuppa and a biscuit, you could have compared deals from our 70 trusted home insurance partners.

If you did compare the market, like nearly a third of our customers, you could save an average of £106.82 on your buildings and contents insurance¹ – that’s enough for several celebratory takeaways when you move in. We also found that a lucky 10% of our customers found savings of £225.58² when they compared with us – which is a bit more than you’d find down the back of the sofa and certainly not a potential saving to ignore.

I already have buildings with my mortgage lender – what are my options?

Check when your policy comes to an end and take the opportunity to compare deals to see what you could save. It’s worth digging out all your paperwork so you can see exactly what you paid and what was covered. More importantly, making sure you know when it’s due to end means you’re less likely to fall into the auto renewal trap that many insurance policies have in place.

Of course, there’s nothing stopping you from switching part way through your policy. But you’ll probably be charged admin and cancellation fees and these may wipe out any money you’d be owed if you had paid upfront and you won’t earn your full year no claims bonus if your insurer offers one. Waiting for your policy to end is usually the best and most cost effective option.

Want savings…start comparing

So go on – take ten minutes out of the mad rush of house buying and see how much you could save when you compare home insurance with us. We’re one of the UK’s largest comparison sites so why go all round the houses when we’re confident you can get the right deal for you at the best price, right here.

¹ Based on Online independent research by Consumer Intelligence during August 2016. 10% of consumers could achieve this saving on their Buildings and Contents insurance with comparethemarket.com.

² On average 32.94% of new buildings and contents insurance customers achieved this saving with comparethemarket.com, according to independent research carried out by Consumer Intelligence during May 2016.

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