Home insurance when buying or selling a house

Home insurance is an important policy to have, and mortgage providers often require that you have at least buildings cover in place. Whether buying or selling a home, it’s important to know when you’re responsible for damage or loss to the property.

Key points: 

• If you’re buying, make sure buildings insurance for the new property is in place from when you exchange contracts

• If you’re selling, make sure your buildings are covered until the sale is complete

• Once the sale is complete you can cancel your buildings insurance cover on the sold house

• If there’s damage to a property between exchange and completion, it’s up to the seller to tell the new owner

What insurance is needed when you buy or sell a home?

Buildings insurance is required by a mortgage provider when you buy a house. It protects the structure of the property from damage or incidents such as fire and flood.

If you are buying, it’s necessary to have buildings insurance in place when you exchange contracts or until the sale is completed if you’re selling.

When you exchange contracts, this is the time when the buyer legally commits to purchasing the new home and therefore should take out insurance to cover it too.

It’s a good idea to get it arranged well in advance though, as you don’t want to risk your mortgage not being approved or delays to the process.

Why do you need home insurance?

Home insurance covers you if something happens to your property, and it’s made up of two parts. You can buy separate buildings and contents insurance policies, from different insurers, or you can buy a combined policy.

• Buildings insurance covers the structure of your property - the bricks, mortar, fixtures and fittings, including outbuildings.

• Contents insurance covers your belongings inside the home - such as the items you would take with you if you moved house.

Is buildings insurance a legal requirement?

Buildings insurance is not legally required, but your mortgage provider will insist on having it in place, and some won’t approve a loan without seeing evidence of the policy first. Even if you are lucky enough to own the property outright, it is strongly advisable to obtain cover for the buildings.

Contents insurance is not a legal requirement either, but it’s important for protecting your belongings. You can also pay an extra premium to cover them when you’re outside the home too.

You don’t have to buy insurance on the day, it is often better to find a policy in advance and start it from the day of exchange.

Do you need to cancel insurance when selling?

After you’ve completed the house sale, you can cancel your home insurance. You don’t need to keep it in place after this point, as the house now belongs to someone else and this means you no longer have an insurable interest.

You could either cancel the policy completely or you may decide to move it to your new home.

If you move it, your insurer will need to carry out a new risk assessment on the new property. This may change the price you pay for your premiums, which could go up or down. If you move from a high-risk area to a low-risk area, for example, your policy could get cheaper.

How to arrange buildings insurance before you exchange

If you’re buying a new place, it’s important to have insurance in place. The last thing you want after exchanging contracts is for the new home to be flooded or for a fire to happen, for example, as without cover, you may be left paying for the repair work yourself.

You will also want to do this as soon as possible so you have time to compare policies and find the best one for you and your property. When you’ve found a policy you’re happy with, you can ask the insurer to start it from the day you exchange.

Who is responsible for damage between exchange and completion?

If a property is damaged after you’ve exchanged contracts, but before the house sale is completed, it’s up to the seller to tell the new owner about the damage, but usually it is the buyer who would make a claim under their policy. This is why it is so important to have buildings cover in place for the new property from the date of exchange of contracts.

What’s included with John Lewis Money Home Insurance?

You have the flexibility of choosing three levels of cover with John Lewis Money Home Insurance, so you can pick the policy most suited to the cover level you would like.

For all three tiers, (Bronze, Silver, and Gold) if you’re selling your home, the buyer is covered for any loss or damage caused by anything covered under the buildings section of the policy. This covers loss or damage that occurs between the date of exchange of contracts and completion of the sale. However, this cover does not apply if the buyer has their own cover in place. Therefore, you should keep this in place until you have completed the sale of the property.

If you’ve chosen to add the optional accidental damage extension to your Bronze policy, or you have selected Silver or Gold (where the cover is automatically included), you’re covered against accidental loss or damage when a professional removal firm is moving your contents from your home directly to your new permanent home, anywhere in the British Isles.

Not only are our Gold, Silver and Specialist home insurance policies five-star rated by Defaqto, but our different levels of cover can be tailored to suit your property.

Plus, our Specialist Home Insurance, brought to you by Covea Insurance, is specifically designed for high-value contents & homes, or unique homes.

This article is for promotional or information purposes only. You must not rely on it as advice.