Buildings Insurance: Getting It Right Before Completion

Why Buildings Insurance Matters

Here's the confusing bit that catches many buyers out. You don't own the property yet, but from exchange onwards, you're responsible for it. If it burns down, you're still obliged to complete the purchase. Insurance is your protection against that risk. This is part of the odd legal position between exchange and completion—you have the risk but not yet the ownership.

This isn't optional. It's legally required under the Standard Conditions of Sale that every residential property contract includes. And your mortgage lender requires it as a condition of releasing completion funds per ABI (Association of British Insurers) guidance. No insurance = no mortgage money = no completion.

What Buildings Insurance Covers

Buildings insurance covers the structure of the property and fixed components. Think of it as protecting the building itself rather than what's inside it.

Covered:

• Walls, roof, doors, windows, framework
• Fixed kitchens and bathroom suites
• Fitted wardrobes and built-in furniture
• Permanent flooring (tiles, wooden floorboards)
• Heating systems and boilers (fixed to the property)
• Fixed electrics and plumbing
• Decking and patios
• Fencing and walls (boundaries)
• Fitted extensions or conservatories

Not covered:

• Removable belongings (furniture, kitchen contents, personal items)
• Decorative fittings (curtains, carpets) though some policies include these
• General wear and tear or lack of maintenance
• Damage from poor maintenance (e.g., gutter damage from not cleaning gutters)

Contents insurance is separate. That covers your belongings. Buildings insurance is just about the structure and fixed items.

When It Needs to Start

Buildings insurance must be in place from the exchange of contracts date, not from the completion date or moving day. This is a common source of confusion.

The reason is that the risk (responsibility for damage) transfers to you at exchange. So your insurance must start at that same point. If the property is damaged between exchange and completion, your insurance needs to be active to cover it.

Most lenders require proof that insurance starts at exchange before they'll release completion funds. So you need to organize this well in advance, not just before moving day.

When To Arrange It

Arrange buildings insurance 3–4 weeks before your expected exchange date. Don't wait until a week before exchange. Insurance companies need time to process your application, and you need time to get confirmation in writing.

Here's the timeline:

4 weeks before exchange: Get quotes from insurance companies. Provide the property address, rebuilding cost estimate, property type (detached, semi, flat, etc.), age of property, and any specific features (solid walls, listed building, etc.).

3 weeks before exchange: Select your insurance. Confirm the start date will be the exchange date. Don't assume—ask them explicitly. Get written confirmation.

2 weeks before exchange: Once you know your exchange date for certain, confirm the exact start date with the insurance company. Make sure it's set to begin on the exchange date, not a different date.

1 week before exchange: Ensure payment has gone through. Check your policy documents. Verify you have the policy number and certificate. Contact your conveyancer with these details.

At exchange: Your conveyancer confirms insurance is in place with your lender. Lender confirms they've received proof. You're good to proceed.

Don't leave this to the last minute. Insurance company offices don't work round the clock. If you order a week before exchange and there's a processing delay, you might find yourself scrambling the day before you were meant to exchange.

Getting Insurance Approval From Your Lender

Your lender has specific requirements for buildings insurance. You can't just get any insurance. It must meet their standards.

When you get insurance quotes, mention the property address and that you'll be obtaining a mortgage. Ask the insurance company if they're aware of any lender requirements for that postcode or property type.

Once you've selected insurance, you need to provide your lender with:

• Policy number
• Name and contact details of the insurance company
• Start date (must be exchange date)
• Rebuild cost covered (must be sufficient for the property)
• Cover type (comprehensive or named perils)

Your conveyancer will forward this information to the lender. The lender reviews it and confirms they accept it. This usually takes a few days.

Only once your lender has confirmed acceptance of the insurance can your conveyancer exchange. So it's important to get this sorted early. If the lender rejects the insurance (perhaps the cover is insufficient or the company isn't on their approved list), you'll need to arrange different insurance. This takes time.

Cost and Excess

Buildings insurance costs vary widely. A small terraced house in a low-risk area might cost £80–150 per year. A large detached house in a flood-risk area might cost £300–600 per year. It depends on the property's rebuilding cost, age, location, and claims history.

When you get quotes, you'll see an excess (the amount you'd pay towards any claim). Common excesses are £250 or £500. Higher excess = lower premium. You can sometimes increase the excess to reduce the premium.

Your lender might require a minimum cover level and a maximum excess. So you can't accept a quote with a £1,000 excess if the lender says maximum £500.

Payment Methods

Most insurance companies want payment in full before the policy starts. Some offer monthly payment plans with a slight increase to the premium.

If you're paying upfront, do it well before exchange. Not the day before. If the payment fails (blocked payment, insufficient funds, etc.), the policy won't start. You'd need to arrange emergency insurance or delay exchange.

If you're on a monthly plan, the first payment must clear before the policy starts. So set it up 2–3 weeks before exchange to ensure it's processed and active.

For completion, you've already paid the annual premium (or the first month if on monthly plan). There's no additional insurance payment at completion. The insurance continues from exchange through completion and onwards.

Updating Insurance After Completion

After completion, you'll register the property with HM Land Registry. Once you're registered as the owner, update your insurance provider with this information. Many policies require confirmation of registered ownership within 30 days of completion.

Also, if you've taken out a mortgage, the lender's name appears on the insurance as a named interest. This is important—it means the lender has a stake in any insurance payout. This is standard and expected by lenders.

If Something Goes Wrong With Insurance

Insurance Doesn't Actually Start

You've arranged insurance, provided details to your lender, and they've accepted it. But you discover the day before exchange that the policy hasn't actually started. The insurance company says your payment failed or your application wasn't finalized.

This is a problem. Completion can't happen without insurance in place. Contact your insurance company immediately. Find out what's wrong. If it's a payment issue, sort it immediately (ensure funds are available, try the payment again, call the company).

If it's an application issue (they need more information), provide it immediately. Insurance companies have emergency processing for exactly this situation.

Your Lender Rejects the Insurance

You've arranged insurance, but your lender says it doesn't meet their requirements. The cover isn't high enough, or the company isn't on their approved list, or something else is wrong.

You'll need different insurance. Tell the insurance company you need to arrange alternative cover. You might be able to cancel the policy (within the cooling-off period) or you might lose the premium. Get different insurance that meets your lender's requirements.

This is why checking lender requirements before arranging insurance is so important.

The Insurance Company Fails Before Completion

Very rare, but an insurance company could fail (go out of business). If this happens after you've paid, the Financial Services Compensation Scheme (FSCS) will cover your claim up to £2,000. But it creates a complication for completion.

If the insurance company fails before your policy starts, you need emergency insurance for the exchange date. This can usually be arranged quickly.

To minimize risk, use major insurance companies with solid track records, not small niche providers.

Buildings Insurance: Key Takeaway

Buildings insurance isn't optional. It's legally required and your lender requires it. Arrange it 3–4 weeks before exchange. Get written confirmation of the start date. Provide proof to your lender. Don't delay. Once it's in place, you're protected against the main risks between exchange and completion.

Can I arrange buildings insurance after exchange?

Technically yes, but your lender won't release completion funds without proof of insurance in place first. Exchange cannot proceed without it. Arrange it 3–4 weeks before your expected exchange date, not after.

What happens if the property is damaged between exchange and completion?

Your buildings insurance covers it. You're still obliged to complete the purchase—the insurance payout covers the repair costs. This is why insurance is non-negotiable.

How much does buildings insurance typically cost?

For a standard 3-bedroom house, expect £300–£500 per year. A flat might be £250–£400. Costs vary by property value, location (flood risk areas cost more), age, and construction type. Get quotes from at least three providers.

Can I use buildings insurance designed for rental properties?

No. If your lender discovers you have the wrong type of insurance (buy-to-let instead of owner-occupied), they may refuse to complete. Always specify "main residence buildings insurance" when requesting quotes.