News & Articles

Do You Need New Build Home Insurance to Get a Mortgage?

Do You Need New Build Home Insurance to Get a Mortgage?

While new builds can be more expensive, they are often appealing to homeowners for a number of reasons. Costs for repairs and redecoration should be minimal for the first few years and, if the property is built to the correct standards, new build properties are also good for energy conservation and will significantly lower your energy bill. Adding to this, fixtures and fittings can often be chosen by the homeowner, thereby tailored to your own preferences and taste, giving you a house that is designed to fit your style.

While most people have to take out a mortgage to buy new build homes, before you get these loans you will have to purchase certain insurance policies and warranties. In this guide, we look at these plans in further detail.

Do Mortgage Lenders Require Building Insurance?

Buildings insurance isn’t a legal requirement for homeowners. However, if you intend to take out a mortgage on the property, you will have to take out building insurance. This cover will give the mortgage provider confidence since they will know that they are providing finance on a safe investment. With this cover, you will not be personally liable for damages to the structure of your house and its permanent fixtures and fittings. The insurance company will even cover the entire rebuilding cost if the structure is destroyed. Different providers will have certain exclusions, but they will usually cover the house in case of unexpected events like fires, storms, earthquakes, floods, and explosions. The plan will also cover the cost of repairing fences, garages, and sheds.

Mortgage providers will usually allow you to choose your own building insurance provider. It is important to always pick A-rated insurance providers since these ones are financially stable. Unrated providers can easily go into liquidation and will leave you uninsured and significantly out of pocket should something go wrong. Also, make sure you check the exclusions in the cover to determine what will be covered under the plan. Do note that although mortgage providers cannot choose an insurer for you, they can reject the company you choose.

If you are taking out a mortgage, the building insurance should be enough to cover the outstanding loan. Building insurance is a good option even for people who aren’t taking out mortgages. In case your house is damaged, you will not need to go into debt in order to restore it to its original condition.

If you are leasing a house, you may be required to purchase building insurance from a specific insurer. The freeholder may also purchase the insurance plan and charge you for it. Tenants are not required to get building insurance. However, they are held responsible for damage to fixtures and fittings. If you are a tenant, it is recommended that you consider getting household contents insurance.

New build insurance 2.0 Structural Warranty

Do I Need House Insurance on a New Build?

A new build is defined as a house that was completed in the past two years. The property should also not have served as the residence of another person. Although most buildings come with a warranty, you should still buy house insurance for the property. The warranty will only cover issues related to the building work carried out by the developer. Insurance policies will cover you far beyond that. Many mortgage providers in the UK will insist that you buy house insurance before your loan can be processed.

House insurance covers include two elements: building insurance and content insurance. As mentioned earlier, building insurance will cover the structure of your home, as well as any permanent fixtures and fittings. It can cover the entire cost of repairing your house in case of damage. Contents insurance is also vital as it covers the cost of repairing or replacing the contents of your home in case of theft or damage. It is possible to buy contents insurance and building insurance separately. However, you will save money if you combine the two plans. Many providers of house insurance plans will offer extra coverage at no additional cost. For example, you can get a cover for accidental damage to your belongings. You may also be protected against the loss or damage of personal possessions, including your phone and certain jewellery items.

When calculating the cost of your premiums, the insurance provider will need to know the rebuild value of the property and the level of cover you require. To find the rebuild value, you will have to consider the type and size of the property. The materials used to build the house will also affect the rebuild value of the house. New build homes will usually have higher rebuild values compared to older properties, and this is because they have modern fixtures and fittings.

Do I Need Buildings Insurance if I Have a Structural Warranty?

Structural warranties are also required by mortgage lenders as they cover the cost of any damages or defects after the building work has been completed. It will cover damage that is caused by poor workmanship, faults in construction, wrong materials, and faults in the design, amongst other things. While structural warranties can be very useful, they don’t offer sufficient cover. For this reason, you also need to take out building insurance. This insurance will fill in any gaps that aren’t included in home warranties, so both covers are necessary.

For example, structural warranties cover the causes of water damage in the house, but they will not pay for the water damage itself. Building insurance plans pay for this damage and will restore the house to its original condition at no extra cost to you. The insurance cover will also cover legal expenses in the case of a third-party injury claim on your property.


New build homes can offer plenty of benefits to homeowners. However, most people have to take out mortgages in order to purchase these properties. To qualify for the loan, you will have to purchase building insurance, and this should at least cover the outstanding mortgage on the property. Building insurance will cover the cost of repairing or rebuilding the structure, as well as the garage, fences, and sheds. Mortgage providers will also require you to purchase a structural warranty. This warranty runs for a period of 10 years and covers any structural defects in the building. Both of these covers are necessary as they cover different key aspects of the building.

For more information, read our article ‘Insurance for New Build Properties’ and contact us to find out more about our insurance solutions tailored to your specific needs.

More Posts Like This

Get a Quote

Buildsafe are the UK’s leading specialist broker of Building Warranties and Construction Insurance. Get a free quote from us online today!