Purchasing a house is an exciting and significant step in your life! It’s not just a place to live, but also a big investment that deserves protection. That’s where building insurance, or homeowner’s insurance, comes into play. Let me walk you through why and when you should consider getting this insurance while buying a house.
when to get building insurance when buying a house
Before the Exchange of Contracts
When buying a house, there are two main stages: exchange of contracts and completion. During the exchange of contracts, the sale becomes legally binding, and you will be required to pay a deposit. It is recommended that you receive building insurance before exchanging contracts. Why this moment? Well, in many places, the moment you exchange contracts, you’re legally responsible for the property. That means if something happens to your new home between then and when you actually get the keys (the completion), it’s on you. This will protect your investment in case of any unexpected events, such as fire, flood, or theft.
Before Completion
Completion is when you become the legal owner of the property, and the balance of the purchase price is paid. It is essential to have building insurance in place before completion to protect your investment fully. You will be covered if anything happens to the property between the exchange of contracts and completion.
If You Are Getting a Mortgage
If you are getting a mortgage to purchase your house, your lender will require you to have building insurance. This is to protect their investment in case of any damage to the property. Therefore, obtaining building insurance before completing your mortgage application is crucial.
Why you need to get Building Insurance Early?
Getting your building insurance early is a smart move for a few reasons:
- Protection from the Unexpected: Imagine if something damages the property after you’ve committed to buying but before you move in. If you have insurance, you’re covered for these kinds of scenarios.
- Meeting Lender Requirements: If you’re taking out a mortgage, chances are your lender will want you to have building insurance from the moment you exchange contracts. It’s a common requirement.
- Peace of Mind: Knowing you have this protection in place can take a load off your mind during what can often be a pretty stressful time.
What type of building insurance should I get when buying a house?
Standard Building Insurance
A standard homeowners policy will protect your home from disasters like fire, flood, storm, and theft. The cost of restoring or rebuilding your home, as well as the cost of any permanently attached fixtures and fittings, are normally covered by this sort of insurance. Standard building insurance typically does not pay for repairs due to normal wear and tear or maintenance problems.
Accidental Damage Building Insurance
A shattered window or spilled drink on the carpet are just two examples of the types of damage that might be covered by building insurance. Although the premiums for this insurance are more than those for regular building insurance, their protection is invaluable.
Unoccupied Building Insurance
You need unoccupied building insurance if you’re purchasing a home that will sit vacant for an extended time, like a vacation property or a home undergoing renovations. Insurance against vandalism, theft, and broken pipes, all of which are more likely to occur in a vacant house, is provided by this policy.
Landlord Building Insurance
Landlord building insurance is a need if you plan to rent out a property you purchase. If your tenants cause accidental or malicious damage to your property, you’ll be covered by this policy. This policy will reimburse you for lost income if your rental property is damaged and uninhabitable.
Listed Building Insurance
You should get listed building insurance if the home you desire to purchase is historical or on historical property. If a covered peril damages your home, this insurance will pay to restore it to its pre-loss condition. Because of the specialised nature of the repairs needed, insurance for a listed structure is typically more expensive than insurance for a conventional building.
Who is responsible for insurance between exchange and completion?
The buyer is responsible for insurance between exchange and completion in most cases. This means that the buyer should arrange a suitable insurance policy for the property from the moment of exchange of contracts, as they will be liable for any damage or loss that may occur before completion. The seller has no obligation to insure the property during this period unless they have agreed to do therefore in the contract of sale or under a separate agreement.
when to get building insurance when buying a house | Conclusion
In Conclusion Buying a house is a big leap, and it’s smart to safeguard your investment. Getting building insurance right when you exchange contracts is an important step in this process. It’s not just about having insurance, but making sure you have the right coverage for your specific needs. Take the time to read through your policy details, and don’t hesitate to seek advice if you have any doubts. Remember, it’s all about making your home-buying journey as secure and stress-free as possible!
