What insurance do you need when buying a house?

Buying a house in the UK comes with a lot of paperwork, and insurance is a big part of it.

Buildings insurance is usually required by your mortgage lender before you can complete your purchase. But there are a few other types of insurance worth thinking about too, including contents insurance and life insurance.

This guide explains which types of insurance you may need when buying a house, when to arrange them, and which ones are optional.

Key takeaways

When buying a house in the UK, there are three types of insurance to consider:

• Buildings insurance: usually required by your mortgage lender from the date you exchange contracts.
• Life insurance: not legally required, but an option to protect your family if you die before paying off the mortgage.
• Contents insurance: optional, but a popular choice to protect your belongings.

What insurance do you need for a mortgage in the UK?

When you take out a mortgage, your lender is giving you a large sum of money to buy a property. To protect that investment, many mortgage lenders will require you to have buildings insurance in place from the date you exchange contracts.

Buildings insurance covers the physical structure of your home. This means the walls, roof, floors, windows, and fitted fixtures. It can protect against damage from events like fire, flooding, storms or subsidence.

Do you need home insurance to get a mortgage?

"Home insurance” is a term that often gets used to mean different things, so it's worth understanding the distinction.

Buildings insurance covers the structure of your property. Contents insurance covers the things inside it such as your furniture, clothes, electronics, and personal belongings.

When people say "home insurance", they can mean buildings insurance, contents insurance or a combined policy that includes both.

Your mortgage lender will typically require buildings insurance as a condition of your mortgage. Contents insurance is separate and optional but is often bought at the same time.

Read our guides on what contents insurance covers and why you might need both buildings and contents insurance.

Life insurance and getting a mortgage

Life insurance isn't legally required when you take out a mortgage. But it's worth considering if you have a family who depend on you financially.

The idea is simple. If you were to die before paying off your mortgage, life insurance can help your family pay off the debt or continue making payments. This could help them stay in the home.

There are two main types of life insurance:

• Decreasing term life insurance: The payout decreases over time, in line with your outstanding mortgage balance. It's typically used for mortgage protection.
• Level term life insurance: The payout stays the same throughout the policy term. This can be useful if you want to leave money for other expenses beyond the mortgage.

If you're new to the UK, life insurance might not be something you've needed to think about before. It's worth speaking to an independent financial adviser to find the right option for your situation.

Other types of insurance to consider when buying a house

Beyond home insurance and life insurance, there are a few other options worth thinking about when you buy a home.

Critical illness cover

Critical illness cover pays out a lump sum if you're diagnosed with a serious illness, like cancer or a heart attack. It can help cover your mortgage payments if you can't work. It's not required, but it might be worth considering if you're the main earner in your household.

Income protection

If you're unable to work due to illness or injury, income protection insurance pays a portion of your salary until you can return to work, or until the policy ends. It can be a useful safety net when you have a mortgage to pay.

Home buyers protection insurance

Home buyers protection insurance, sometimes called conveyancing insurance or buyers protection insurance, covers costs you've already paid if your purchase falls through before completion. This can include things like surveys and legal fees.

In the UK, property sales can sometimes fall through after you have already paid these costs. Buyers protection insurance is not required, but it can offer peace of mind during a long purchase process.

When should you get home insurance when buying a house?

Timing is important, and it can catch a lot of buyers off guard. This is especially true if you're not familiar with how the UK property buying process works.

In England and Wales, buying a house usually happens in two stages:

• Exchange of contracts: This is when both buyer and seller sign the contracts and the sale becomes legally binding. You are now committed to the purchase.
• Completion: This is when the money changes hands and you get the keys. You legally own the property from this point.

You should have buildings insurance in place from the moment you exchange contracts, not just from completion.

Who is responsible for insurance between exchange and completion?

The buyer is responsible for insurance between exchange and completion.

From exchange, the property is technically at the buyer's risk. This means that if something was to happen to the building in that period, such as a fire, you could still be legally required to complete the purchase.

Without insurance, you would have no cover for the damage. Make sure your buildings insurance starts on your exchange date, not your completion date.

How much does home insurance cost when buying a house?

The cost of home insurance varies depending on a number of factors, including:

• Where your property is located
• The rebuild cost of your home
• The value of your contents
• Your claims history
• The level of security at the property

The rebuild cost is how much it would cost to completely rebuild the structure of your home from scratch if it were destroyed. It's not the same as what you paid for the property.

Our guide to how much home insurance costs gives a useful overview of what to expect.

Tips for first-time buyers getting home insurance

Here are a few other things to keep in mind when sorting your insurance:

• Check if your area is at risk of flooding. Flood damage can be expensive and isn't always covered as standard. Our guide to flood insurance and the Flood Re scheme explains what your options are.
• Think about security. Better locks, alarms, and security measures can reduce your premium. Our guide to home security and ways to reduce your premiums has practical tips.
• Keep the property maintained. Insurers may refuse a claim if damage was caused by a lack of upkeep. Our guide to home maintenance and risk prevention is worth bookmarking once you move in.
• Check what's excluded. Read your policy carefully. Things like damp and gradual deterioration are often not covered.

How Marshmallow can help

At Marshmallow, we offer home insurance designed to be straightforward and easy to understand. That matters when you're navigating a new system, especially if you’re new to the UK.

Whether you need buildings insurance, contents insurance or both, you can get a quote online in minutes.

Get a home insurance quote with Marshmallow