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

If you’re buying a house, your mortgage lender will likely insist you have buildings insurance before they give you the loan.

Get the lowdown on why you need buildings insurance for a mortgage and when to get it.

If you’re buying a house, your mortgage lender will likely insist you have buildings insurance before they give you the loan.

Get the lowdown on why you need buildings insurance for a mortgage and when to get it.

Written by
Anna McEntee
Insurance comparison expert
Reviewed by
Rachel Lacey
Insurance and money expert
Last Updated
13 SEPTEMBER 2023
4 min read
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Do I need buildings insurance for a mortgage?

Buildings insurance is usually compulsory if you’re buying your home with a mortgage. Your lender is unlikely to release your mortgage funds unless you have buildings cover in place that could pay for the cost of rebuilding your home if it’s damaged or destroyed.

Your mortgage provider has a stake in your home so needs to be sure you have cover in case disaster strikes.

From their point of view, if your home were to burn down and you didn’t have buildings insurance, they almost certainly wouldn’t be able to get back the full amount they lent you.

What does buildings insurance cover?

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

  • flooding
  • leaks and burst pipes
  • fire
  • storms
  • subsidence
  • fallen trees, aerials and satellite equipment
  • burglary, theft and malicious damage.

Buildings insurance could cover the cost of repairing damage to the walls, roof and floors, plus any permanent fixtures and fittings like your kitchen and bathroom.

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.

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 from them.

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

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. This is the point at which you become legally committed to buying the property. It 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 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, 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 offer you cover. 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?

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

There’s nothing to stop you from switching before your current policy ends, but you’re likely to 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.

It could be more cost effective to switch when your current policy ends.

Read our guide to switching home insurance provider.

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Anna McEntee - Insurance comparison 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.

Learn more about Anna

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.

Learn more about Rachel

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