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According to a recent report, 68% of properties with rebuild costs under £1.5 million were underinsured by an average of 43%, leaving homeowners at huge potential risk.
When buying a property, most people tend to focus on getting the best mortgage terms and how much their tax bill and monthly payments will be. Yet, ensuring the home itself is adequately protected often gets put to the bottom of the list of priorities. Given the amount of time and effort it takes when securing a mortgage on what is likely to be the largest purchase of your life, it is surprising how many people will rush through the insurance process, or not insure a property at all. Once you have been offered a mortgage, there are a number of things in terms of insurance which should be considered.
In the event of a claim, an insurer will not simply pay the sum of the insurance as is commonly assumed. If you are not adequately insured, you may be liable for the percentage of under insurance. Therefore, it is crucial for your home to be insured for the correct value, as the rebuilding costs can vary from a property’s market value. For example, if you have made significant improvements to your home, you should look into whether the sum originally insured should be increased to cover the new value.
The majority of mortgage lenders will insist you have building insurance in place before issuing a loan. As a result, buyers often rush through this stage, simply opting for the first policy they find so they can secure the mortgage quickly. However, settling for cheap insurance can often be a false economy as it may not pay out when you need it most – something which is only discovered once the worst has happened.
There are two kinds of insurance which should be considered; building insurance covers the structure of the building itself, including any fittings or outbuildings, whilst contents insurance protects your furniture and personal items. A good policy should protect you against loss or theft, fire, storm, flood damage and even water leakage or burst pipes.
Our mortgage brokers are also experts in sourcing the most appropriate insurance for you. Our ability to streamline the process of agreeing the terms of your mortgage, as well as the necessary insurance policy takes the hassle out of the process for you. To speak to someone about your insurance requirements, get in touch with our team of specialist brokers.