Insurance when buying a house: what do you need to have in place and when?

Buying a property can be an exciting, yet stressful time, with plenty on your to-do list. But in the chaos it’s important that you don’t forget to get the right insurance when buying a house.

There are a number of different home insurance types to consider and you’ll need them at different stages of the buying process. We explain all you need to know.

What insurance do you need when buying a house?

The first type of insurance to consider is home insurance. This broadly falls into two categories - contents insurance and buildings insurance. Cover types are sold separately, but it’s usually cheaper and easier to buy a combined policy.

There’s no legal requirement to purchase so you don't need home insurance, but if you are buying a house with a mortgage, the lender will usually require you to have buildings insurance to protect their investment.

‘Appropriate buildings insurance is required to be in place by the time contracts are exchanged,’ explains Sarah Smith at LV General Insurance. ‘Exchange is the point at which buyers legally commit to purchasing the property and accept responsibility for insuring the property.'

Besides it being a compulsory condition of getting a mortgage, taking out buildings insurance ensures the costs of repairing or rebuilding the structure of your home will be covered if it is damaged or destroyed. ‘Cover includes outbuildings, fixtures and fittings, and garages within the boundaries of the land,’ says Sarah.

Contents insurance won’t be a condition of getting a mortgage, but it’s still worth having as it enables you to make a claim if any of your belongings in the home are damaged, lost or stolen. It’s best to get this in place for completion of the property, but you can buy it at any time.

Getting the right home insurance cover

When buying contents insurance, it’s crucial that you have the right level of cover in place. If you underestimate how much your belongings are worth, you may not receive a full payout if you later make a claim.

‘Watch out for the 'average clause’ in contents insurance' warns Dan Copley, consumer expert at Zoopla. 'Because this could ultimately affect the pay you receive when you make a claim. E.g if you have £40,000 worth of contents but only insure for £30,000, you've only bought 75% of the cover you need. And will only receive 75% of a claim.’

If you have high-value items such as bicycles and jewellery, these may also need to be listed separately on your policy.

Some contents insurance policies will also provide cover for your belongings while they are in transit to your new home. This stands as long as cover is in place before the move. If your policy does not include this as standard, you may be able to pay to add it.

Another watch out is if you are carrying out home renovations. If you’re buying a property but waiting to move in, check the terms and conditions of your policy to see if it covers unoccupied properties. ‘Most insurers won’t cover for loss or damage if left for more than 60 days in a row,’ says Sarah from LV.

Depending on the work being carried out, you may benefit from taking out separate renovation insurance.

What other insurances might you want to consider when buying a house?

Home buyer protection insurance protects you in the event your house purchase falls through. It and can help you claim back costs such as conveyancing fees, valuation fees and mortgage fees. 

Cover usually lasts between 120 and 180 days and should be taken out once you’ve had an offer accepted on a house, but before a survey has been carried out. It’s also worth considering income protection and life insurance.

‘Income protection provides a replacement income in the eventuality that you cannot work due to illnesses or injury. This is vital to allowing you to continue to pay bills including the mortgage,’ explains Louise Colley from Zurich Insurance UK.

Life insurance pays out a lump sum to your dependants if you die within the term of the policy. Critical illness cover can also be added, to pay out in the event of serious illness.

‘The amount paid is decided by the customer and is often based on any outstanding mortgage liability,’ adds Louise. ‘It means that should the worst happen, any dependants left behind won’t be forced to sell the family home in the absence of income or savings.’