Buying your first property can be an overwhelming time. From savings to finding a mortgage, putting down a deposit and understanding stamp duty, there are a lot of things to consider. As for insurance, how do you know what you need? And when?
Here is our round up of insurance essentials for first time buyers.
Taking out home insurance is not legally essential. However, if you are planning to take out a mortgage to buy your property, most mortgage providers will require you to have buildings insurance to protect the structure of your property.
The two main types of home insurance you should consider are Buildings Insurance or joint Buildings and Contents Insurance. You can buy Buildings Insurance and Contents Insurance separately but most often they are purchased together.
Buildings insurance covers the structure of your property, the walls, roof, windows, doors, service pipes, gates, flooring, and fixed fixtures (i.e. kitchen cupboards and bathroom suites). You may consider making a claim against your buildings insurance in the event of fire, floods, storms, falling trees or branches, vandalism, impact from vehicles or subsidence for example.
To obtain a quote for Buildings Insurance, you’ll need to tell your insurance provider some details about your property. What type of property is it? When was it built? How many rooms does it have? What windows are installed? What types of locks are used and is there a security system. Do you have a garage? What materials were used in building your property? How many external doors are there? If you have a property that is unusual, a listed building or something else ‘non-standard’ you’ll need to make that clear to your provider. It’s helpful to have as much detail as possible here, and often useful to refer to your mortgage documents and any surveys that were completed on the property.
Also important to be aware of is the ‘Building Rebuild Value’. This value is the ‘sum insured’ by the insurance industry, the amount it is estimated that it would cost to rebuild your property if it were destroyed. Crucially, this is different to the market value (which can often be higher) and does not include the cost of the land on which the property sits, just the real cost associated with a full rebuild in the event of destruction. If you are taking out a mortgage, this value should be available via your mortgage documents, otherwise there are some online tools available to help you with this calculation. Be careful here to include hidden fees such as architects’ fees and the cost of clearing a plot of land.
Contents insurance covers your belongings. The things you’d be able to bring with you when you move house. Some people refer to it as what would fall out were you to tip your house upside down and empty it out. This normally includes clothes, furniture, carpets, curtains, appliances, collectibles among other items. A claim against your contents insurance could be relevant in the event of theft, fire damage, flood damage, earthquake damage or vandalism.
To calculate your contents insurance, the simplest way is to take it room by room. Work through each room noting down all possessions in as much detail as possible. If you have electrical devices, note the make and model. If you have the price to replace each item, add that too. List items that have significant value (jewellery, bikes, tablets, phones etc.) and don’t forget to include items in your garage. Being as accurate as possible is key. Many people would estimate their contents at around £30,000 per home while the average UK home owner has around £55,000 worth of contents so it’s worth taking your time to get this estimation right to ensure you have adequate cover.
When it comes to high value items (art, jewellery, watches etc), you may need to provide proof of value for each so collecting this information in advance will help streamline the process. Having accurate valuation information is vital to ensure the policy is valid.
It is possible to add on to your basic Building and Contents Insurance with extras such as Home Emergency, which provides emergency assistance to repair damage or to prevent further damage to your home, making sure your property is very quickly safe and secure.
When to insure
Ultimately you should plan to have your insurance in place for the day your conveyancing contracts exchange and from that date onwards. It’s also important for you to have your insurance before you move homes because if any of your belongings get lost or damaged in transit, you’ll be covered for that loss.