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

If you’re buying a house, your mortgage lender will likely ask you about buildings insurance. Get the lowdown on why you need it and how to track down a great-value policy.

If you’re buying a house, your mortgage lender will likely ask you about buildings insurance. Get the lowdown on why you need it and how to track down a great-value policy.

Rachel Lacey
Insurance and money expert
4
minute read
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Last Updated 5 DECEMBER 2022

Do I need buildings insurance?

It’s not a legal requirement to take out buildings insurance for your home. But, if you’re buying your home with a mortgage, your lender is unlikely to release your loan unless you have buildings cover in place.

This is because your mortgage provider has a stake in your home and needs to know that you have the funds to pay for repairs if disaster strikes.

Even if you own your home outright, buildings insurance is still a good idea. If your home was flooded or burnt down, would you be able to foot the repair bill yourself?

What does buildings insurance cover?

Buildings insurance protects the structure of your home from a variety of risks, including:

  • flood
  • water damage from leaks
  • fire
  • storm damage
  • subsidence
  • malicious damage.

Cover applies to the structure of your home, so that’s the walls, roof and floors, plus any permanent fixtures and fittings like your kitchen and bathroom.

The right policy should cover the cost of repairing or rebuilding your home if disaster strikes. If you’re unable to live in your home while work is being carried out, it should also cover the cost of alternative accommodation.

Buildings insurance doesn’t cover the 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. While some lenders will include buildings insurance as part of the mortgage package, if they don’t and they try to sell you a buildings insurance policy, you’re under no obligation to buy it.

The policy offered to you by your mortgage provider may give the right level of cover, but you might be able save money by shopping around for better value buildings insurance.

It’s important to note that your mortgage provider does have the right to reject your choice of buildings insurance if it thinks it doesn’t offer adequate cover. But, even if that was the case, you’d still be free to choose your own 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.

I already have buildings insurance with my mortgage provider. What are my options?

Find out when your policy ends and take the opportunity to compare home insurance providers to see if you can save.

There’s nothing to stop you from switching before your current policy ends, but you’ll likely be charged an admin and cancellation fee. You could also miss out on adding a full year’s no claims bonus to your next policy if you switch part way through the year.

This means it’s usually more cost effective to switch when your current policy ends.

Read our guide to switching home insurance provider.

I’m buying a house. When do I need to have my buildings insurance in place?

You need buildings insurance you from the date contracts are exchanged. This is the point at which you become legally committed to buying the property.

Your solicitor or mortgage lender will likely remind you of the need to take out buildings insurance, but you can prevent delays by getting a head start.

If my buyers have to get insurance on exchange, does this mean I can 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, knowing you have your own buildings insurance in place could spare you a legal battle. It could also ensure you don’t end up stranded with nowhere to live.

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