New build properties are becoming more popular in recent years. A new build is a house built within the last two years that has yet to be owned or lived in.
As first-time buyers are looking for a home they can call their own with no previous owners; we see a rise in the number of new homes being built.
Between 2022 and 2024, 212,570 new homes were built in the UK, 900 more than the previous year.
When buying a property, looking at insurance coverage can help put your mind at ease. New builds have their own separate category for insurance as these builds may differ from other long-standing properties.
Some new build homes come with warranties in the UK, but these warranties don't include home insurance or any other cover.
In this article, you'll learn all about new build home insurance, what coverage you need and how much you can expect to pay.
What Is Home Insurance for New Builds?
Insurance for new builds is similar to home insurance for other properties.
Usually, for properties that have been around for a while, you can get two separate insurances: buildings insurance and contents insurance. Most providers offer a combined policy for a new build property, including contents and buildings insurance. New build home insurance is usually split into buildings and contents insurance covers, each covering different parts of the property.
Buildings insurance covers any structural issues with the property. The buildings insurance policy includes the property's overall structure and permanent fixtures like a fitted kitchen and bathroom. The insurance company will compensate you for damage caused by fires, burst pipes, floods, theft and subsidence.
Some policies include outside fixtures like sheds, swimming pools, fences and grates. The insurance policy should cover the rebuild value of the property should the home ever be harmed and need rebuilding. New build insurance doesn't cover the cost of ongoing maintenance.
Contents insurance policy covers the cost of household belongings against theft, damage or loss. Depending on your insurance company, they could offer a new-for-old policy, which means you'll get new items for the damaged or lost ones.
Alternatively, the insurer could provide you with the ‘as new' plan, in which the insurer pays out on the depreciated value of the items, meaning wear and tear will be considered when calculating the replacement cost.
Do You Need New Build Home Insurance?
Most new builds come with a building or structural warranty; the most common warranty is a Buildmark from the National House Building Council (NHBC).
Most new houses in the UK are constructed by companies registered with the NHBC; these constructions come with a certificate that acts as a 10-year warranty protecting you from covered structural defects in the house.
Typically, a builder will fix any structural issues within the first two years of completing the build, and then afterwards, the warranty provider will pay for any related problems with that work. The NHBC Buildmark warranty only covers home repairs of the physical structure caused by poor workmanship.
The manufacturer's build warranty differs from new building insurance; you should take out new build insurance alongside it for extra coverage. New build home insurance isn't a legal requirement.
However, most mortgage providers may require you to take out the insurance cover before you exchange contracts. Your mortgage provider may require you only to take out building insurance, but it could save money if any issue arises with your household item; you get coverage for contents insurance, too.
Without home insurance, you will have to cover the cost of any damages that occur to your property. So, if your property is damaged, you must cover the cost entirely. Insurance can relieve this worry as your provider will help take the financial burden from you should anything happen to your newly built property.
How Much Does New Build Home Insurance Cost?
If you're worried about the insurance cost for your newly built home, you'll be relieved that new build properties usually have cheaper home insurance options than older houses.
A new build tends to have high-standard safety features, meaning they're less likely to break or have long-lasting damage. New buildings have all new plumbing, electrical work and roof fittings, so you're less likely to claim the home, and that's why the insurance is usually cheaper.
Home insurance premiums vary based on the insurance broker, rebuild value, and agreed amount upon compulsory and voluntary excess. The most significant factor that affects price is the cost of rebuilding the property. The rebuild value is different from the amount you paid for the property.
The amount you pay for the house factors in building cost, desirability of the home and amenities in the property area. The rebuild value is usually lower than the market price of the property.
Insurers will offer different plans and premiums, so there is no one fixed price for insurance. The cost of the cover will depend on what you want, but you can expect to pay the following:
- Buildings insurance policy: Up to £180
- Contents insurance policy: Up to £70
- Buildings and contents: Up to £210
It's usually cheaper to pay annually for insurance, so that's something to remember when you're looking for insurance policies.
Compare home insurance quotes and providers to ensure you get the right deal that suits your desired coverage.
Tips for Looking for the Best Home Insurance
There are many insurance brokers out there to choose from when picking your home insurance, and if you're a first-time buyer, you may be unsure of what to look out for or what factors to consider when finding the right home insurance for your new build home.
Factors to consider when researching home insurance:
- Other property insurance: Consider adding other insurance policies for even more protection. For example, legal expenses cover to ensure any legal costs are covered if a claim is made against you as the homeowner. Accidental damage cover and personal possessions cover may also be policies to consider adding to your cover.
- Compulsory excess: Compulsory is a predetermined amount you'll need to pay if you make a house insurance claim. For example, suppose your compulsory excess is £300, your voluntary excess is £0, and you claim a broken sink replacement for your fitted kitchen, which costs £700. In that case, your insurer will take the compulsory excess of the claimed amount. So, you'll get a total of £400 from your insurer to fix the sink.
- Voluntary excess: Voluntary works like compulsory excess, but you choose the amount you pay. You can pay as much or as little as you want. The more voluntary excess you pay, the cheaper your premium will be. When you make a claim, you must pay voluntary and compulsory excess.
- Home insurance provider: You'll want to make sure the provider you choose has a good reputation and one that can support you and give you help should you need it. Your mortgage provider or financial advisor may have some valuable suggestions.
- Arrange insurance in advance: You should have your home insurance in place starting the day you get the keys to your new home. Starting insurance coverage at the beginning of your home-owning period can prevent uncovered waiting periods.
Final Thoughts
As we mentioned earlier, home insurance isn't compulsory. However, it will come in handy should you need it. Protection for your home can bring you ease of mind should it be damaged or repaired. Take a look at what different insurance companies have to offer you.
Before you go, once you’ve found your ideal insurer and plan, review the formal agreement carefully to ensure that you know all terms and conditions.
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