New Build Home Insurance
New build homes have never been more popular – the number of new homes being built per year has increased by 75% since 2013. If you're one of the thousands of people in the process of buying a new build home here’s everything you need to know about insuring your new palace.
What insurance will I need for a new build home?
- A Warranty – A new build home should come with a warranty. This should cover you against any defects or structural problems with your home for up to 10 years. The warranty only covers problems that are the builder’s fault. You need to have your own insurance in place to cover you for everything else. Find out more in our guide to New Home Warranties.
- Buildings Insurance – You need buildings insurance to protect you in the event of fire, flood or subsidence. It will also cover any structural issues that the new home warranty doesn’t allow for. A mortgage lender will also require that you have buildings insurance in place from the moment you exchange contracts. This is to make sure that their stake in your home is protected.
- Contents Insurance – You should also get a contents insurance policy. This protects everything in your home in the event of anything from a fire to a burglary.
Problems getting home and car insurance
While you need to have home insurance when you buy a new build home, getting it can be tricky. At HomeOwners Alliance we often hear from our members that insurance firms reject them for car and home insurance. The main problem is often the postcode; brand new postcodes often aren’t on an insurer’s system.
With a new build property, the developer or builder needs to contact the local authority’s planning and building department so a new address can be created. A council officer then chooses an address and post code and registers it with the Royal Mail Address Development Centre. The new post code goes live when the Royal Mail is informed that mail can be delivered to the address. Problems occur if insurance, banks and utility companies don’t update their own databases regularly. So, your new post code may not be on their system. All insurers update their systems at different rates, so if one insurance firm rejects you try another.
How can I get my post code recognised?
You need to contact your builder and the Royal Mail to check your postcode is registered. Then it’s a case of finding an insurer that has updated their systems recently so has your address on file. This whole process can be a headache – something you don’t need when you are dealing with the stress of buying a property.
An easier option is to speak to our partner insurance brokers A-Plan. They will check that insurers are updating their databases. If that hasn’t happened they can do the legwork to sort it out. A-Plan also know who to speak to in order to avoid a ‘computer says no’ situation.
Problems with new build warranties
Many people are attracted to new build properties because of the warranty they come with. On paper a new build warranty protects you from any defects in your build for the first two years and structural problems for up to ten years. You can find out more with our guide to New Home Warranties – what they do and don’t cover.
The problem is what the warranty says, and what the developer is prepared to do can be very different. We regularly hear stories from members who are struggling to get the builder to come back and fix faults. One thing you can do to help get your voice heard is get a snagging survey before you move in. This involves a professional looking around your new build home and making a snagging list. They will then help liaise with the developer and help drive through problems with your builder on your behalf.
What do I have to do to claim on my new build warranty?
If you spot a problem with your new build within the first two years of it being built you should speak to your builder. If they agree that the problem is their fault they are responsible for putting it right within a reasonable time.
If you have any problems getting your builder to sort problems you have raised in the. first two years, make a formal complaint and if there is still no luck, escalate to the provider of your warranty. There are three main providers of new home warranties – The National House-Building Council (NHBC), Local Authority Building Control Warranty (LABC) and Premier Guarantee. You can find out more in our guide to Fixing Problems in a New Build Home.
If you have structural issues after the initial two-year builder warranty period you’ll need to raise directly with the firm providing the warranty cover.
Are new homes cheaper to insure?
The good news is yes, new builds are often cheaper to insure than older properties. This is because they are usually built with the latest, most secure doors and windows. This often attracts a discount from insurers as your home will be harder to break into.
One thing to consider when insuring a new build home is the rebuild value. This is how much the insurance company would have to pay out to have your home rebuilt if the worst happened. Many people put down the price they paid for their home, but this means you are massively overdoing it. The amount you paid for your property includes the cost of building it, but also the desirability of the home, supply and demand in the area and amenities in the local area.
The simple cost of rebuilding your home is usually quite a bit less than the market value. The Association of British Insurers has a great calculator to help you work out the rebuild value of your home.
Our guide to home insurance includes lots more tips on how to find the best insurance deal and keeping your premiums down.