60-second summary
When it comes to buildings insurance and mortgages, here’s a quick rundown:
Buildings insurance is usually compulsory if you’re buying a home with a mortgage.
You should have cover in place from the date you exchange contracts.
Buildings insurance typically covers your home’s walls, roof, floor and permanent fixtures and fittings. It doesn’t cover your home’s contents.
Buildings cover protects you against risks such as fire, flooding, leaks, storm damage, subsidence and malicious damage.
You don’t have to buy buildings insurance from your mortgage provider – but they will insist you have adequate cover.
You can switch home insurance policies if you already have cover with your mortgage provider, but it may be best to switch at renewal.
Shopping around is one of the easiest ways to find a home insurance deal to meet your needs.
Do I need buildings insurance for a mortgage?
Buildings insurance is usually compulsory if you’re buying your home with a mortgage. Without cover in place, your lender is unlikely to release your mortgage funds.
Buildings insurance could pay for the cost of rebuilding your home if it’s damaged or destroyed. And since your mortgage provider has a stake in your home, they need to be sure you have cover in case disaster strikes.
If your home were to burn down and you didn’t have buildings insurance in place, your mortgage provider would almost certainly lose out financially, as well as you.
What does buildings insurance cover?
Buildings insurance protects the ‘bricks and mortar’ structure of your home.
This includes the walls, roof and floors. It also covers any permanent fixtures and fittings, like your kitchen or bathroom.
Buildings insurance protects you against a variety of risks, including:
Leaks and burst pipes
Storms
Fallen trees, aerials and satellite equipment
Burglary, theft and malicious damage.
If you’re unable to live in your home while repair work is being carried out, it could also cover the cost of alternative accommodation.
But buildings insurance doesn’t cover any possessions you keep in your home. You’ll need contents insurance for those.
Do I have to get my buildings insurance from my mortgage provider?
No, you don’t. Some lenders will include buildings insurance as part of the mortgage package. But you’re under no obligation to buy it from them.
Shopping around and comparing quotes for buildings insurance is one of the easiest ways to find a deal that meets your needs.
Your mortgage provider does have the right to reject your choice of policy if it thinks it doesn’t offer adequate cover. But if your suggestion is rejected, you’d still be free to find another alternative.
If you’re using a mortgage broker, they may also offer to arrange buildings insurance for you. But again, you’re under no obligation to buy the policy they recommend.
When should I get buildings insurance when buying a house?
You’ll need to have buildings insurance in place from the date contracts are exchanged. That’s the moment at which you become legally committed to buying the property.
Having cover in place at this point means you’ll be protected if the house is damaged between then and the date you move in.
Your solicitor or mortgage lender will likely remind you to look for cover. But it’s worth getting a head start.
If my buyers have to get insurance on exchange, can I cancel the buildings insurance on my current property?
It’s not a good idea to cancel your buildings insurance before you’ve moved out and handed over the keys.
If disaster strikes between exchange and completion, having buildings insurance in place could protect you. It could also ensure you don’t end up stranded with nowhere to live.
Can I switch if I already have buildings insurance with my mortgage provider?
Yes, you can. But if you switch before your current policy ends, you’re likely to be charged an admin or cancellation fee.
You could also miss out on a full year’s no-claims bonus if you change policy part-way through. So, it could be more cost-effective to switch when your current policy ends.
The best time to start shopping around for a cheaper deal is roughly three weeks before your policy renews.
So, find out your renewal date and start comparing home insurance to see if you could save.
Anna’s all about delivering fantastic insurance products at a great price. She cuts through the jargon and finds what’s most important and worth your hard-earned money.
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.
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