New build properties are houses that were constructed within the last two years. For a house to be considered a new build property, it must also have never had an owner, nor should it have ever been lived in. Insurance for these buildings is usually placed in a special category because the properties may have defects, as well as different features and fittings that may not work properly. In this guide, we take an in-depth look at insurance for new build properties.
What is the Insurance for a New Build House?
Insurance for new build houses is similar to regular home insurance. Most lenders split this cover into buildings insurance and contents insurance, but combining the two is usually preferred as it can bring down the total cost of the plan.
Buildings insurance is meant to cover the structure of the property, as well as other permanent fixtures like the bathroom and the fitted kitchen. With this cover, the insurance company will compensate you in case of damage that results from fires, floods, burst pipes, theft, and subsidence. Garages, fences, and sheds can also be covered under the buildings insurance. Ideally, the plan should cover the full cost of rebuilding the home in case disaster strikes.
Your insurance company can also offer optional extras for a fee. These include legal expenses covers, home emergency covers, and boiler breakdown covers. The plan should provide you with temporary accommodation in case you are unable to live in your home while repairs are being carried out. Since different companies cover different aspects of a build, you should study the plans carefully before making a purchase or consult with your insurance broker.
It is important to remember that new build insurance never covers the cost of ongoing maintenance of your house. You should always carry out the essential maintenance of the property and appoint a professional to help you if necessary. This is because your insurer may reject your claims if they discover that you haven’t been maintaining the house adequately.
The other part of new build insurance is contents insurance. This cover protects your household belongings against damage, loss, or theft. The insurer can choose to go with the ‘new for old’ policy, where you will get new items for the damaged ones. This system can also include cash settlements. The other option is to get an ‘as new’ plan, where the insurer will pay out on the depreciated value of the items. This means that wear and tear will be taken into account when calculating the replacement cost.
Contents insurance covers almost everything you would take with you as you move, and these include furniture, electrical goods, clothes, money, jewellery, and pieces of art. It may also include the movable contents of your garden and outbuildings.
A few areas will not be covered under content insurance plans, and these include the physical structure of the building. It may also not include certain expensive items. For example, items that are priced over £1,000 may only be covered under high-value items insurance. Also, the insurer may not pay out if there is evidence that your house was left unsecured, leading to theft. Some insurers will also require you to inform them about new lodgers living at your address. Otherwise, your policy will be invalidated in case of theft.
Do I Need Building Insurance on a New Build House?
New buildings are usually protected by a 10-year manufacturer’s warranty, and this covers structural defects in the property. Usually, the builder will fix any structural issues in the property within the first two years of completing the construction. After that, the warranty provider will pay for any problems relating to the building work carried out by the developer.
While a manufacturer’s warranty can protect you against structural issues in the building, you will still find it important to take out new building insurance. This type of insurance isn’t legally required, but many mortgage providers will need you to have the cover before your loan is processed. This protects them from liability in case the property is damaged or destroyed.
It is worth noting that lenders will only require you to take out buildings insurance; you don’t necessarily have to buy contents insurance. However, there are many benefits of taking out contents insurance or the entire new build insurance plan. In case of theft or property damage, you could find yourself significantly impacted financially.
Do I Need Buildings Insurance on a New Build Before Completion?
Buildings insurance is only meant for properties that have already been completed. While the building is under construction, you can take out other forms of insurance, including:
• Construction all-risk insurance
• Third-party liability insurance
• Public liability insurance
• Product liability insurance
• Professional indemnity insurance
• Plant and equipment insurance
• Employer’s liability insurance
What Insurance do I need for a New Build Flat?
The insurance for a new build flat is similar to that of any other home. If you are planning to furnish the entire flat, you can take out the entire new build insurance (buildings insurance and contents insurance). On the other hand, property owners who intend to rent out the units can simply buy buildings insurance. This will cover the actual structure of the property against issues like vandalism, theft, and fire.
Is Insurance Cheaper for New Builds?
Yes, insurance for new builds is usually cheaper than that of older properties. This is because newer properties are built with high-standard safety features.
A key factor that will determine the price of your insurance is the rebuilding cost of the property. Many people put down the amount of money they paid for the house, but this is almost always inaccurate. That is because the buying price of the house is determined by the cost of building the property, the desirability of the home, the amenities in the area, and the forces of demand and supply. The cost of rebuilding the house is usually lower than its market price.
You can use the calculator of the Association of British Insurers to work out the rebuild value of your home.
Do All New Builds Have Warranty?
Almost all new build homes have warranties and insurance protection that last for 10 years. A handful of warranty providers cover 95% of all newly built homes in the UK, and they include Premier Guarantee and LABC Warranty. The warranty for new homes is designed to cover any structural issues in the property, and these could result from poor workmanship or failure with the construction materials. When taking out a mortgage, the lender will always require you to have an approved warranty in place.
When buying properties that were built within the last two years, you will need to take out new build insurance. To qualify for these plans, the property must not have had a previous owner and shouldn’t have been lived in. Insurance for new build properties usually includes contents insurance and buildings insurance. While it is possible to purchase these two covers separately, buying them as a unit can enable you to save money. Your mortgage provider will require you to take out buildings insurance at the minimum, but contents insurance can be very important.
Why Choose Buildsafe?
Our experts have over 40 years’ of experience in the property sector so you can be assured that we will handle your project with the expertise and care that has been successfully developed over this time.
We take away that pain by managing the process for you and ensuring you receive the best price and the most appropriate cover to meet your requirements whilst having an easy to always reach team of experts on hand. Do not hesitate to get in contact with us.