Buildings Insurance
Buildings insurance is defined as “the building and anything you would normally be expected to leave behind if you were to move home” and would include things like fitted furniture, garden sheds, and all fittings and decorations.
If you have a mortgage, your lender will insist that you have buildings insurance.
It is your responsibility as the borrower to take out buildings insurance and to ensure that it is adequate and to ensure that the premiums for the insurance are maintained to ensure continuity of cover.
House buyers must ensure that buildings insurance is "on risk" with effect from exchange of contracts, as one is committed to buy from this point. The solicitor will require confirmation that you have buildings insurance in place before exchanging contracts.
The sum insured must be based upon an estimate of current rebuilding costs and will be increased in line with the House Rebuilding Cost Index.
Sometimes, there is a requirement to take the lender's own buildings insurance, although this is now rare. However, if the borrower arranges buildings insurance elsewhere, the lender may charge a nominal administration fee to view the details of the chosen buildings insurance, to check that the policy provides adequate cover for the property, which is, of course, the lender's security for the mortgage loan.
