New Build Home Insurance

The benefits of buying a new build property are very attractive to many home buyers. Usually chain-free, helping ease the pain of the buying process, new build homes are often more energy efficient, meaning lower running costs, and have brand new kitchens, bathrooms, carpets and other fixtures and fittings, and may come with the latest in hi-tech specifications.

You also don’t have to deal with the sorts of problems commonly associated with older homes, such as dodgy boilers and electrics, rotting woodwork, damp and collapsing roofs.

In fact, buyers are generally willing to pay a premium for new build properties compared to ‘second hand’ homes.

Beware ‘snags’

However, as with many things in life, the deal isn’t always as good as it might at first appear and it can be a case of ‘buyer beware’, particularly when it comes to insurance.

New build homes often have what are known in the industry as ‘snags’. Snags arise when builders fail to finish the work correctly, which is often the case when they’re working on multiple identical dwellings and under time pressures.

A snag might typically be as simple as a door failing to close properly or a light switch being wrongly positioned. However, more serious snags can arise such as kitchen fixtures not working correctly, water pressure problems, sewage failures and major cracks.

 

Are New Build Homes Covered? As long as they’re NHBC registered

Ideally you would carry out a thorough inspection on the finished property before paying for it, but where someone has bought a home off-plan, before it’s been built, this isn’t possible.

Either way, you are protected as long as the builder is registered with the National House Building Council (NHBC). Again, ideally you would check this before purchase.

As long as the builder is registered with the NHBC, the home will come with 10-year insurance and a construction warranty.

The NHBC guarantee ensures any ‘snags’ identified within the first 2 years of ownership will be put right, as well as any structural problems arising from between 3 and 10 years.

Sell and the NHBC guarantee is passed on

If you sell your home within that time the guarantee shifts to the new owner, helping your newly built home retain part of its attraction to buyers.

If you’re buying with a mortgage, your mortgage issuer may insist on checking that the builder of the property is NHBC registered before agreeing the home loan.

However, the guarantee doesn’t cover you for every day wear and tear, or natural shrinkage (usually plaster cracks and wood warping), condensation and poor home maintenance.

Builders going bust

If you buy off-plan, before the building work is completed, the NHBC also covers you if your builder goes bust and the home isn’t finished.

How to check

Ask the builder or building company for its NHBC registration number and the NHBC should be able to confirm that they’re covered by the scheme or not.

If they’re not, don’t even think about buying the home.

NHBC doesn’t replace home insurance

Don’t be mistaken for thinking that if your new build property has the HNBC guarantee you won’t need home insurance though.

While the guarantee may cover you for snags and structural issues arising from building mistakes, it certainly doesn’t protect your property and possessions in the same way that home cover does.

You need a home insurance policy in place to ensure you’re protected in the same way other homes are from the effects of fire, flooding, subsidence, theft, storms, lightning, and other types of accidental damage.

As a minimum, you need two types of cover, buildings insurance and contents insurance, to make sure both the structure of the building is financially protected and your possessions.

Contents cover isn’t a legal requirement, either for those with a mortgage or those lucky enough to own their home outright.

However, building insurance is for those with a home loan, while those without would be crazy not to have it.

Legal cover

If you’re concerned about the build quality and finish of a new build home, it might be a good idea to add legal insurance to the home cover you buy.

You would then be covered for the cost of legal representation if you end up in dispute with the builder and it involves solicitors and potentially court proceedings.

Best deals and comparing quotes

The most cost-effective way of buying buildings and contents cover, whether for a flat or house, is in one home insurance policy as it generally costs considerably more to buy them separately.

Make sure you compare home insurance quotes by using a home insurance comparison website and insurance brokers.

We would recommend using a broker as not only should they ensure you have the right cover for your type of property and requirements, they can often also access deals you won’t find on comparison sites. A good broker will able to talk you through some of the jargon and even help you in the event you need to make a claim, potentially dealing with loss adjustors on your behalf and offering claims procedure advice.

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The views expressed here are solely those of the author and do not necessarily reflect the views of Policy Expert.