First time buyers make insurance mistakes
15/06/2015
Almost half of all first time buyers fail to budget home insurance into their costs when buying a home.
A study by the Co-operative bank shows that due to lack of budgeting, 28% of people who have bought their first home in the last five years have left it uninsured. This works out at £1.5 billion worth of property and contents currently at risk, according to the research.
Of those who did take out home insurance, 13% underestimated the cost of the cover, with one in ten expecting it to cost under £100.
Other common mistakes first time buyers make include not having any content insurance, not arranging insurance until after they had moved all their possessions into their new home and guessing information or answering questions incorrectly when purchasing their quote.
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.
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.”
Need financial advice?
If you have any personal finance questions related to this news article, then please contact our financial advisers. You can get in touch by asking a question online, calling us on 0800 092 1245, or by arranging a visit.
Share this..
Related stories
110 per cent mortgages to benefit first-time buyers
According to research by Alliance & Leicester Mortgages, three out of four mortgage brokers feel that first-time buyers stand to benefit the most combined mortgage and personal loan products.Over half of brokers questioned expected first-time buyers with little or no deposit to be the most keen to plump for 100 per cent plus LTV mortgage, and more than half thought there would be an increase in th...
Read MoreRecession Watch : The UK mortgage market
Ever since the UK government realised that the UK banking sector was effectively in freefall we have seen calls for mortgage liquidity to be increased to "spend" our way out of the recession. However, up until the last couple of weeks there had been no sign of increased liquidity in the UK mortgage market and even less instances of competitive mortgage rates and mortgage offers. However, companies...
Read MoreWill interest only mortgages become a thing of the past?
Slowly but surely a number of changes to the UK mortgage arena are becoming clearer with the expectation that interest only mortgages could well become a thing of the past. The Financial Services Authority (FSA) is adamant that any risk in the UK mortgage arena needs to be reduced in the short, medium and longer term to ensure we do not see a repeat of the credit crunch. However, many believe that...
Read MoreMortgage lending in the UK falls to record low
For those observers wearing rose tinted glasses the news that November's mortgage figures are the lowest on record does not make good reading. The situation in the UK property market seems to be getting worse at a time when many had been hoping for some form of stability as we move from 2008 into 2009. While many are blaming the UK banking sector for a significant reduction in mortgage funding liq...
Read MoreMortgage lenders starting to tighten their belts again
A report out this week has confirmed that mortgages taken out by first-time buyers in the UK fell by 2% in July compared to the previous month. While a total of 19,400 mortgages were still arranged in July there was a surprise increase in the level of deposit required which now stands at 24% after falling to 21% in the spring period. So are UK mortgage lenders starting to tighten their belts again...
Read More