Becoming a first time buyer is an exciting time, but it’s not without a lot of stress and possibly a few setbacks. One aspect of buying your first home is finding the right insurance, which covers your property in the event of damage, as well as matching the requirements for mortgage lenders.
If you’re unsure which home insurance policy you need, or how to find one which best matches your needs and best interests, this blog post is perfect for you. We’re going to dive into why home insurance is crucial, what type of cover you need, as well as looking at extras and exclusions you need to be aware of.
Why home insurance is crucial for first time buyers
Home insurance is crucial for first time buyers for a couple of reasons. The first of which is that it is usually a requirement by a mortgage lender. The second reason is that home insurance can protect you against the cost of rebuilding or repairing your home in the event of damage as a result of fire, or environmental disasters such as flooding.
Most of the time, people buying their first home have saved up a lot of money to do so, and understand that it is a huge financial responsibility to take on. The worst thing you need at that point is for disaster to strike, and you lose everything you’ve saved for through circumstances out of your control. That’s exactly why you should consider finding the right policy that covers you and your needs.
Speak to one of our team members for help finding the perfect policy.
The types of home insurance cover you need as a first time buyer
When buying your first home, you need to understand the different types of home insurance:
- Buildings insurance – This typically covers the physical structure itself. Including walls, windows and roof, as well as fixed installations such as kitchen surfaces and bathrooms. On top of this, building insurance normally covers plumbing and electrical wiring too.
- Contents insurance – This typically covers what’s inside your building. So any furniture, electronics, clothing, valuables and whatever else you have in your home is covered by contents insurance. This normally applies in cases of damage or theft, but it’s important to note that policies vary, so review your policy carefully to fully understand what you’re covered for.
Normally, a mortgage lender will require you to have buildings insurance as a requirement in order to protect their investment in your property.
Choosing the right amount of cover for your first home
It can be tempting to try to save money where possible when seeking home insurance for your first home. You’ve probably already spent a lot of money, and maybe you’re considering saving money on insurance, thinking that you might not need it.
Whilst this thought process is understandable, we’d definitely recommend reconsidering. You need to consider the value of your property and your possessions. For buildings insurance, you need to try to estimate the cost of a full rebuild of your property. And for contents insurance, try to work out how much all of your belongings combined would be worth. Don’t forget to factor in items you may have forgotten about, such as those in lofts or garages!
We’d definitely recommend taking the time to properly go through this process, as failure to do so could leave you in serious financial trouble in the future. This is something a trusted financial advisor, such as the team at Barlow Irvin, could help you with.
Are there optional extras to standard home insurance a first time buyer should consider?
There are a few extras to home insurance which you might want to consider as a first time buyer. Some of these policies would only be worth considering depending on your specific needs and requirements, but it’s certainly worth understanding all of your options:
- Accidental damage cover – This covers you for any damage which is unexpected and caused by human error, such as smashing something by mistake or spilling paint on a surface. Accidental damage is often not included in standard policies.
- Personal possessions cover – This includes items which leave the home with you, such as phones and laptops. You can add this onto your contents insurance policy for peace of mind even outside the home.
- Home emergency cover – This covers costs for damages and repairs such as burst pipes or pest infestation, and is especially helpful for first time home-owners who aren’t familiar with house maintenance.
- Legal expenses cover – Whether it’s a dispute with a new neighbour, or you’ve been sold faulty goods, legal expenses can be extortionate.
- High value item cover – If you think you got one or multiple possessions which exceed the single item limit of the insurance plan you’re looking at, consider high value so that these items are listed separately.
Exclusions to home insurance first time buyers should be aware of
First time buyers should know about a few common exclusions to home insurance plans. Note that all insurance plans can differ, but these are some things to look out for:
- General wear and tear
- Poor maintenance/neglect
- Pre-existing damage
- Deliberate or negligent damage
- Pet/pest damage
- High value items
When should first time buyers get home insurance?
First time buyers should aim to get at least buildings insurance as soon as they exchange contracts for the new home. This is the point at which you become financially and legally responsible for the property.
In terms of contents insurance, we’d recommend getting this sorted before you move in, or before you move any items into the property. This should cover you if any property is damaged during the move, as well as from the point you are permanently living there.
Do you need to prove you have home insurance before completing?
Almost every mortgage lender will require you to have buildings insurance before you complete your house purchase. You would have to prove this to whatever lender you choose to go with.
Legally, no type of home insurance is an obligation, but as mentioned, you most likely won’t secure a mortgage without buildings insurance. On top of this, a proper building and contents insurance plan is strongly recommended to avoid future financial trouble.
At Barlow Irvin, we can help you find a suitable home insurance policy which provides the level of cover you need, based on your specific scenario. Get in touch with us to find out more.