You've received your mortgage offer - congratulations! This means your lender has approved your mortgage application and agreed to lend the amount needed to buy your new home. But before you get the keys, there's something vital to sort out: buildings insurance.

One of the most important steps in the home buying process is making sure you have the right home insurance in place by exchange of contracts. In this blog, we'll guide you through everything you need to know about home insurance for exchange, especially if you're a first-time buyer or moving home.

What is buildings insurance?

Buildings insurance covers the structure of your property and its permanent fixtures. Think walls, roof, floors, outbuildings, fitted kitchens, and bathrooms. Standard policies typically protect against damage from:

- Fire and smoke
- Floods or storms
- Subsidence
- Falling trees
- Theft or vandalism
- And other unexpected events

Depending on the provider, you can also add optional extras like accidental damage cover, home emergency assistance, legal expenses or temporary accommodation if your home becomes uninhabitable.

Is buildings insurance a legal requirement?

There's no legal obligation to have buildings insurance in the UK. However, if you are purchasing with a mortgage, your lender will require you to have suitable insurance in place. Some contracts may also state that insurance is required before exchanging contracts.

Your home is likely to be your biggest financial investment - skipping insurance simply isn't worth the risk.

Do I need home insurance on exchange of contracts?

Yes and here's why it's absolutely critical.

Once you exchange contracts, the sale becomes legally binding for both the buyer and the seller. From that moment, you can no longer pull out of the purchase without serious consequences. If either party does back out, they could be liable for up to 10% of the property's purchase price.

What's more, from the exchange date, you become legally responsible for the property, even if you haven't moved in yet. This is why home insurance at exchange of contracts is essential.

Most residential property transactions in England and Wales use the Law Society's Standard Conditions of Sale. These conditions explicitly state that risk passes to the buyer upon exchange. In other words, you must have buildings insurance in place from the exchange date, not the completion date.

Your solicitor will likely ask you for proof of insurance before exchange. Failing to arrange it could delay or even derail your purchase.

What if I'm buying a leasehold property?

If you're purchasing a leasehold property, particularly a flat, the freeholder (or managing agent) might already have buildings insurance for the whole building, with costs split among leaseholders via the service charge.

However, this is not always the case. Check your lease carefully or ask your solicitor to confirm who is responsible for insuring the building. If it falls to you, you must have insurance in place by exchange of contracts.

What about new build homes?

If you're buying a new build or off-plan property it usually comes with a builder's warranty, such as the NHBC 10-year cover. But this doesn't include protection against fire, flood, storm or other insurable perils.

For most new builds you may not need to arrange insurance until completion, but always confirm this with your solicitor. Some developers require insurance from the exchange date, so don't assume - always double-check.

Can I get temporary insurance between exchange and completion?

Yes. But arranging buildings insurance between exchange and completion can be a little more complex than you might expect.

Getting insurance before completion can be tricky because you haven't yet moved in even though you're responsible for it. This can cause complications when buying insurance through comparison sites.

To address this, some insurers offer temporary or specialist cover specifically for this period.

These policies protect you during the gap between exchange and completion. They may also be suitable if you're planning to delay completion or move in at a later date.

Many homebuyers are surprised to learn that you become legally responsible for the property from the exchange of contracts. This legal responsibility creates a bit of a grey area when it comes to arranging home insurance at exchange, especially if you're buying through comparison websites.

Most comparison sites and standard insurers assume your policy should begin from the date you complete and move into the property. However, this default assumption can leave a gap in cover, one that's especially dangerous given that you're liable for any damage to the property from the exchange date onward.

If something happens to the property (like a fire, flood, or structural damage) during this interim period and you haven't arranged cover correctly, you could be on the hook financially - despite not yet living there.

When should I start looking for buildings insurance?

Don't leave it to the last minute.

You can typically set the start date for your insurance policy in the future. So once you know your exchange date, you can arrange insurance to begin on that day.

What information will I need to arrange home insurance?

In order to arrange buildings insurance before you exchange contracts, there are a few pieces of information that you'll need to know, this information includes:

- The year the property was built
- Type of construction (standard or non-standard)
- Any history of structural issues or subsidence
- Any history of flooding
- Number of bedrooms and bathrooms
- Whether the property will be occupied immediately

Get in touch with our friendly and knowledgeable team for more information.