This site uses cookies. By continuing to browse the site, you are agreeing to our cookie policy.

First time buyer mistakes leave property and belongings worth £1.5bn at risk

The Co-operative Insurance reveals the safest place in the UK to be a gnome

17th June 2015

  • Half of first time buyers don’t budget for home insurance when buying their first property
  • Two fifths don’t buy contents insurance
  • More than 50% have ‘guess-timated’ important details when obtaining a home insurance quote

New research from The Co-operative Insurance reveals that half of first time buyers don’t budget for home insurance when stepping onto the property ladder (47%). As a result, over a quarter (28%) of new homeowners who have bought their homes in the past five years don’t have any home insurance in place, leaving more than £1.5bn worth of property and contents currently at risk.*

Of those who have taken out insurance, and did budget for it, just over a tenth (13%) admitted to underestimating the cost of cover, with over one in ten** believing that it would cost less than £100 a year to adequately protect their home and its belongings.

Despite first time buyers investing in their new home, common insurance mistakes highlighted included not having any contents insurance in place, with two fifths of those questioned not taking out this type of cover (41%). Of these, more than a quarter said this was because they had run out of money (29%), almost a tenth said they were too busy to sort it out (10%) and more than a fifth didn’t think they needed it (24%).

Of those who did have contents cover, almost a fifth didn’t arrange it before they moved all of their belongings in to the new property (19%). And for those who did set aside an amount for home insurance as part of the property buying -journey, the average budget allocated was £236.72 for an annual premium.
The findings reveal a lack of understanding when it comes to the home buying process, as a third (34%) didn’t know that having buildings insurance in place when they exchanged contracts was a minimum requirement of a mortgage.

Despite a potential property-owner’s responsibility to have buildings insurance in place from the date of exchange, one in six (17%) admitted to buying their buildings insurance too late – at the time of contract completion.

More than half of first time buyers have guessed information to obtain a home insurance quote (53%) yet surprisingly, almost a third of these did not bother to find out the correct answers and update their quote before actually purchasing the policy (31%). Men were more likely to go back and provide their insurer with accurate information once they had checked their details (45% vs 37% of women.)

In addition, when obtaining a buildings insurance quote, a quarter estimated the rebuild cost of their home to be the same as the purchase price (25%), as opposed to speaking to their insurer for advice or using a rebuild calculation tool to gain a more accurate picture of the cost implications, should something happen to their property. 


Caroline Hunter, Head of Home Insurance at The Co-operative Insurance, said: “The research highlights not only a widespread confusion among first time buyers of all ages when it comes to assessing the type of home insurance they require for their property, but it also demonstrates that too many individuals have an inadequate level of cover or are leaving themselves exposed by purchasing insurance too late in the buying process, or worse, not at all.
As many first-time buyers are likely to have previously rented a property, their landlord will have taken care of their buildings insurance and therefore, they may not be aware of their responsibility to have this in place when becoming a home-owner.
While buying a house is a stressful time, we would urge people not to overlook their buildings and contents insurance and to make sure they provide the right detail when obtaining a quote, as not doing this can invalidate a policy."

Top five details guessed when getting home insurance quotes:

  1. Cost of rebuilding the property
  2. Age of property
  3. Type of door locks installed
  4. Value of contents
  5. Whether the property is in a neighbourhood watch area

The Co-operative Insurance has put together the following guide for getting first time buying right when it comes to home insurance:

  • Buildings insurance is extremely important as it should cover the rebuild cost of the main elements of your home including walls, floors, windows, roof and doors as well as other outdoor structures such garages, sheds, drives, fences and gates. It also covers permanent fittings, for example kitchens and bathrooms.
  • Once you exchange contracts, you take legal responsibility for your new property, not on the day of completion. Make sure you have buildings insurance in place at this time.
  • If your home is part of a larger building, such as a block of flats, your buildings insurance may be bought in as a joint policy by everyone in the building so you might not need individual buildings insurance but you would still need cover for your personal contents.
  • Your mortgage lender can arrange buildings insurance for you, but it might not be the best price or cover to meet all your needs. Though buildings cover can be a condition of your mortgage, it doesn’t mean you have to buy a policy from your lender.
  • Building polices can often have a fixed sum insured that should cover the rebuilding costs for most homes. However if you choose a policy that requires you to set your own level of cover you should insure for the rebuild cost, not the market price of your property. This can often be found in your valuation or homebuyers report. More information can be found on the Association of British Insurers’ website: http://abi.bcis.co.uk
  • Contents insurance will protect your belongings, i.e. things that you keep in your home, like furniture, carpets, curtains TVs, and other valuable items such as jewellery and mobile phones. Additional cover may need to be added if you wish to cover these items outside your home.
  • This type of insurance is optional but it is sensible to have this in place starting from the day you move your belongings into the new property (so arrange it before).
  • Another reason for making sure you have contents in place at the time of the move is because some home insurance policies will cover your personal belongings ‘in transit’ during the house move if using professional removals contractors, but not all do - check your policy details.
  • For both buildings and contents, choose an excess level to suit your needs based on what you can afford to pay. This usually consists of a set or ‘compulsory’ amount and a flexible or ‘voluntary’ amount that you can choose. These amounts combined are the total amount you must pay towards any claim.

Ends

Notes to editors

* Research carried out by One Poll on behalf of The Co-operative Insurance with 1,500 first time buyers purchasing a property in the last five years.

  • 1,307,000 first time buyers over the five years (2011-2015), according to the Council of Mortgage Lenders (CML) http://www.cml.org.uk/news/723/
  • 28% - percentage of first time buyers who don’t have home insurance
  • £4,282 - the average value of a home claim (buildings and contents)
  • Source: The Co-operative Insurance based on claims settling between June 2014 and May 2015.
  • 365,960 – number of first time buyers currently without home insurance (who have bought property in last five years)
  • £1,567,040,720 - average current insurance gap amongst first time buyers

**14%

For further information please contact

Jenna Moss
Press & Media Relations Manager
The Co-operative Group
0161 767 4354 / 07770 441 828
Email : jenna.moss@co-operative.coop

About The Co-operative Group

The Co-operative Group is the UK’s largest co-operative business, whose purpose is “Championing a better way of doing business for you and your communities.” Owned by over eight million members, The Co-operative Group operates a total of 4,500 outlets, with around 87,000 employees and has an annual turnover of £11 billion with interests across food, funerals, insurance and legal services.

The Group operates across two core divisions of Retail and Consumer Services. The Consumer Services Division includes Funeralcare, the UK’s number one funeral services provider, Co-operative Insurance, a major UK general insurer and CLS, The Group’s legal services operation. Co-operative Insurance offers business, home, motor and pet insurance products.