Insurance – what you need to know when buying a property

When buying a property, in most circumstances you will need to take out buildings insurance, but what other types of insurance should you consider? Whether it’s contents insurance, life insurance or income protection insurance, it’s important to do a bit of research to understand exactly what they cover.

In this guide we take a look at what insurance options are available when buying a home so you can make an informed decision on what is right to protect you and your property.

Buildings insurance

Buildings insurance covers the bricks, mortar, and structure of your property. Mortgage lenders will normally insist that you have building insurance in place before you exchange contracts and move into your home. If you’re a leaseholder, your lease may specify whether you need to take out buildings insurance, or the freeholder may take out insurance on your behalf and charge you for it.

A typical buildings insurance policy will cover any damage to the structure of your home, such as the walls, roof and floors and will cover damage to fixtures and fittings too. Policies can vary, but generally you will be able to claim if your home is damaged by any of the following:

  • Fire, smoke, and explosions
  • Natural events like storms, floods, and earthquakes
  • Falling trees
  • Subsidence
  • Broken pipes and water damage
  • Theft and vandalism

Your policy should cover you for the cost of completely rebuilding your property, so if the worst does happen, you will be able to replace your home. Bear in mind that the cost of rebuilding your home is not the same as the market value, which is often more than the cost of rebuilding. Make sure when you take out buildings insurance, you cover yourself for the right amount so that you don’t over or under insure yourself.

Contents insurance

house flooded

Contents insurance covers your personal belongings against fire, theft, and other risks, such as accidental damage. It is often packaged together with a buildings insurance policy; however, you can arrange them separately.

Unlike buildings insurance, you don’t have to take out contents insurance when buying a home, however, without contents insurance you will have to pay to replace any of your items that are damaged, lost or stolen. This could be particularly costly if several items are damaged at once, for example your furniture or home appliances in a flood.

Your contents insurance policy should cover everything that you will take with you if you move home. To properly cover everything, you will need to calculate the total value of all your belongings.

You can either work this out yourself by listing each item and adding up their value. Or you could use an online contents insurance calculator, like this one from GoCompare.

Life insurance

Depending on your circumstances, you may want to take out life insurance to provide financial protection for your family when you die. A life insurance policy could be used to replace your income, leave an inheritance, and even pay off your mortgage after your death.

There are lots of different types of life insurance that all provide different cover, if you do decide to go ahead with life insurance it is important to fully understand the different options available for you.

This guide from Which? is a good starting point.

Income protection insurance

If you are unable to work due to serious illness or injury, income protection insurance will give you a percentage of your income to help you pay your bills and your mortgage, however it does come at a price. The premiums for this type of insurance can be high, but in households where you are dependent on one income, it could be worthwhile.

Before you consider income protection insurance, do some research on whether you really need it. Some employers offer income protection as a staff benefit and other employers have an enhanced sick pay package that may provide adequate cover.

Mortgage payment protection insurance

Similar to income protection insurance, mortgage payment protection insurance protects you if you are injured or sick and unable to work, but instead of providing a percentage of your income, it will only cover your mortgage payments.

Mortgage payment protection insurance can also cover you if you become unemployed, but this is dependent on your job. Some job types may affect what kind of policy is available to you, for example, manual workers, construction workers and bartenders are seen as higher risk by some insurance companies.

Much the same as income protection insurance, make sure that you are not already covered by any other insurance policies or employment benefits before taking out a policy.

Further advice

For further impartial guidance, the Citizens Advice website has a dedicated section on insurance.





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