New build home insurance

There are many advantages when it comes to buying a new build home:

• You won’t be caught up in the hassle of an onward chain or risk being gazumped. Once your finances are in place and your new property is ready, you can move straight in.

• Some off-plan developments give new owners the choice of certain design features, like door positioning, the colour of kitchen units and garden landscaping, so you can tailor your new home to your tastes.

• If you buy off-plan in an area where house prices are rising, you’ll be building up equity before you’ve even moved in.

• There’s no need to redecorate or carry out repair works – just move your furniture in.

• New build properties are typically built with energy-efficient features, like double or triple glazing and roof insulation, so utility bills might be cheaper.

• Building standards now require new build properties to be fitted with safety features, including industry-approved door and window locks, security lighting and alarms. These security features not only keep your home protected, but could also help reduce the cost of your home insurance.

While there are many benefits to snapping up a new build property, there are also some downsides to bear in mind.

• New builds tend to be more expensive to buy than older buildings because of their modern fixtures and fittings, and can quickly depreciate in value.
• You may have to pay a fee to secure a plot of land for your home, which will be lost if you back out of the deal.
• Construction work might get held up, for example by a global pandemic. If the delays run on for too long, your mortgage offer could expire.
• If you’re one of the first people to move in to an area of new-builds, you could find yourself living on a building site for months.

New homes offer lots of benefits, but they aren’t tried and tested. That’s another reason why insurance is still important. For example, you could still be vulnerable to flood damage or fire, which won’t be covered by any new home warranty you might have. 

Your mortgage provider will also likely require you to take out at least a buildings insurance policy, as a condition of their mortgage offer. They’ll expect buildings insurance to be in place from the exchange of contracts, in order to protect their investment.

The NHBC offers the Buildmark Certificate – a 10-year warranty for new homes and new conversions. In the first two years, your builder must rectify any defects resulting from the work they did, like leaky windows letting in rain, but not issues down to simple wear and tear.

The following three to 10 years are covered for structural problems resulting from the build – which includes the roof, floor, staircases, windows and doors.

NHBC Buildmark also covers you if you’ve exchanged contracts and the builder goes bankrupt before your property’s finished.

Not all builders register with the NHBC, so there’s no guarantee you’ll have a Buildmark Certificate. If not, ask your builder why they haven’t registered with the NHBC. They may have legitimate reasons – perhaps they’re a small company and can’t afford the fees – but it’s a good idea to find out what the reasons are.

If you still want to go ahead and buy the house, you’ll need to take out your own buildings and contents insurance for your new build. Remember, you should buy buildings insurance from the date you exchange contracts.

Yes, if you’re buying a newly converted property you may be able to get a Buildmark Certificate. This will give you reassurance that you’re protected if problems crop up in the future.

But be aware that on conversion properties, Buildmark will sometimes add exclusions to the cover – these will be printed on your insurance certificate.

Yes, the Buildmark Certificate covers the property, not the owner, and is fully transferable during the lifespan of the certificate. So, whether you’re buying or selling a home with a Buildmark policy that’s still in force, the new owner benefits from any remaining cover. Ideally, the policy documents should be handed over on completion.

The most Buildmark will pay out is the original purchase price of the property, as shown on the insurance certificate, up to a maximum of:

• £1,000,000 for a newly built home (up to a maximum of £25 million for all homes in a continuous structure).

or

• £500,000 for a converted home (up to a maximum of £5 million for all homes in a continuous structure).

The limits are increased by 5% of the original limit on each completion date anniversary, to allow for inflation. Buildmark then deducts any amount it has paid, or is going to have to pay, for claims it’s accepted. You can see full details in the Buildmark Policy Document.

There isn’t any kind of excess on the policy, so you don't have to pay towards claims that are accepted. But there’s a minimum claim value shown in the documents.

Your mortgage provider will usually insist you have buildings insurance. If you own your home outright, without a mortgage, you don’t need to have this insurance. But it might still be a good idea as, without it, you won’t be covered if flooding, fire, water leaks or subsidence damage the building.

Again, it makes sense to have it. Neither NBHC nor buildings insurance will cover you for theft or accidental damage to the contents of your home, so you’ll need to make sure they’re protected. Consider combining your buildings and contents policies, as it can work out cheaper than buying them separately.

If you end up in a dispute with your builder or new neighbours, legal expenses cover could prove useful. This optional extra can be added to your home insurance (for an extra cost) to protect you against legal costs relating to living in your new home.

Most legal expenses policies also include a 24/7 legal helpline, which could advise on other legal matters, like personal injury claims, employment disputes and tax matters.

If you do opt for legal expenses cover, check the terms and conditions carefully before you buy, so you know exactly what you’d be covered for and whether it’s worth the extra cost.

New builds are often cheaper to insure than older properties. This is because they’re usually built with high-standard safety features, so there’s less risk of a break-in.

A brand-new roof, wiring and plumbing systems also mean there’s less risk of making a claim on a new build than with an older house.

Getting home insurance for a new build should be largely the same as for any other property. The only snag you might encounter is that some insurance providers may not recognise your postcode.

When a new home is built, the developer or builder needs to contact the local authority’s planning department so a new address can be created. This is then officially registered with Royal Mail. Problems can arise if your new home isn’t yet logged on the insurance provider’s database, but you can always try an alternative provider as they might have updated their systems faster.