Top 6 Home Insurance questions for first-time home buyers.

Why do you need buildings insurance?

If you lived in rented accommodation previously, you probably took out contents insurance to cover your prized possessions and protect yourself against any small mishaps. But, now you’re moving onto the property ladder, home insurance is probably a new service that you’ve not had much experience or knowledge of previously.

Simply put, buildings insurance covers everything that is a fixed part of the house; virtually, the items you need to keep the property functioning, secure, and essential to rebuilding your home. It includes the walls, roof, doors, floors, windows, pipes, kitchen cupboards and the bathroom suites.

If your new home has any outbuildings, including sheds, unattached garages or summer houses, make sure to check that your buildings insurance policy covers a rebuild should the outbuildings be destroyed.

When taking out a mortgage on the property, most mortgage lenders will insist on you purchasing buildings insurance to cover the loan you’ve received and potentially the cost of a property rebuild, but, buildings insurance is not a legal requirement.

If you buy your home without a mortgage, i.e. buy it outright, we’d still recommend taking out buildings insurance to protect your investment and cover any accidental damage the property may incur. During the process of exchanging contracts, your buildings insurance will need to be in place and valid.

Leasehold properties
If your new home is leasehold (potentially in a block of apartments), you may need buildings insurance for the parts of the property you are responsible for. To find out what you are responsible for, check the leasing documents you will receive during the contract transfer.

Communal areas of the property, i.e. entrance areas and hallways, will likely be covered by the freeholder’s buildings insurance. We’d always recommend that you ask for a copy of the freeholder’s insurance documents for the communal areas as your mortgage lenders may ask for this before releasing any funds.

Does your buildings insurance need to cover the cost of your home?

Getting quotes for home insurance, insurers will always ask for the value of the property. If you are unsure what figures to include, the property’s value is not the amount you have agreed to take out through your mortgage. The value of your property is the amount it would cost to rebuild (“sum insured”) including clearing the land and architect fees, not the amount you bought it for.

If your home is damaged or destroyed in an accident, your buildings insurance will cover the cost of rebuilding or repairs, not the cost of purchasing a new home elsewhere.

Building costs such as labour, bricks and mortar remain remarkably consistent. Still, house prices can fluctuate significantly depending on demand, location and economic factors, meaning you may not need to get a property valuation every year to continue your buildings cover.

Where should you buy buildings insurance?

The market to buy home insurance is very open and varied. In the past, it was a requirement to purchase your home insurance through your mortgage provider. Now the home insurance market has many providers offering different levels of insurance, at various price points.
When considering your home insurance purchase, we’d always recommend comparing the services the insurance company provides and reputations. Many people will look for the lowest-priced policy and premium, but then potentially come unstuck should they need to make a claim. Customer service, percentage of claims paid, type of cover and 24-hour services should be taken into consideration.

How much does buildings insurance cost?

Buildings Insurance depends on the size, age and location of your home. Different providers will offer you alternative quotes, so it is crucial to compare buildings cover across the market to find the best price. Local crime rates, a history of flooding and building materials can all have a considerable impact on your premiums.

How can you reduce your home insurance premiums?

There are many ways you could reduce your premiums, from fire protecting your home to joining a neighbourhood watch scheme. For our top 5 tips, please click here.

What type of cover may you need?

Basic buildings insurance will usually protect you against building damage caused by flooding, subsidence, fire, storms, burst pipe and water damage including frozen pipes, theft. When comparing your quotes and premiums, always make sure you compare like-for-like and find out what exactly is included.

To get a free online home insurance quote from Hilltop Finance, please click here. Hilltop Finance’s home insurance product is underwritten by Royal Sun Alliance and Defaqto 5-star rated.

What other insurance may you need?

Aside from home insurance, your mortgage provider may ask for evidence of a Life Insurance policy that could cover the total figure of the funds lent. Your Life Insurance policy can pay off the mortgage’s outstanding balance should you or any other policyholder dies. By taking out life insurance, you will not leave your loved ones with the mortgage debt without the means to pay for it.

If you would like to receive free quotes for Life Insurance from a range of specially selected providers, please call 0161 696 5217 or click here to learn more about life insurance.

Important information: Our website offers information about investing and saving, but not personal advice. If you’re not sure which services are right for you, please request advice from Hilltop’s financial advisers. Remember that investments can go up and down in value, so you could get back less than you put in.

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