How do you get insurance when you buy a new-build home?
From your new build postcode not being recognised, to why getting buildings insurance on a new build is so important. We offer new build buyers some useful intel, along with additional insights via A-Plan Basingstoke’s Branch Advisor, Craig Warburton.
New build postcode not recognised?
If you are moving into a new-build home, one common questions is ‘why is my postcode not recognised?’.
If you’re in the process of buying a new build, you’ll need to arrange to have buildings insurance in place from the date of exchange of contract. This is the point where most new home buyers will look to get insurance. And, at this stage, because the completion of the build may be some time after exchange of contracts, the postcode may not be recognised.
It is a source of frustration for many owners of new-build homes and this can remain an issue even after the Royal Mail itself has recognised the postcode of the housing development. The issue appears to originate with administrative delays in getting new postcodes generated by the Royal Mail added to insurer databases.
When a developer or house builder builds a new property, they have to contact the relevant local authority’s planning and building department once they near completion. This ensures that the address is officially recognised.
“Even with the increased number of new build developments across the UK, Royal Mail is actually very quick in updating their system,” confirms Craig. “The insurers and brokers can then update their systems accordingly so by the time it come around to clients requiring quotations, they are already on our system ready to go.”
How to get a new build address registered
This is all down to your council and Royal Mail. A council officer decides on an address including a postcode and registers it with the Royal Mail Address Development Centre. Your property will need to have a ‘secure delivery point’ and the site needs to be health and safety ready for your postman. The new postcode is known to the council, but not ‘live’ until the staff at the Royal Mail centre are informed that mail can now be delivered to that address.
This usually means a phone call from the developer or builder to Royal Mail. Once that authority is given, which is usually done within 24 hours, any company can then find the new postcode on the Royal Mail’s postcode address file.
Although your developer should register a new build with Royal Mail, if you find that your postcode isn’t registered, it can be worth chasing the developer and contacting Royal Mail. You can call Royal Mail directly on 08456 011110 or fill in this online form.
There’s no guarantee that a third party such as a bank, utility company or insurer will update their database accordingly or in a timely fashion. This very much depends on how frequently the company updates their databases, which might vary from daily to weekly or even monthly. Of course, this will also depend on the cost involved.
However, some people in new-build homes can be left in limbo, sometimes for months, while they wait for that update.
Obviously, this is far from ideal but it does happen, but there are ways around it when it comes to insurance.
Craig has seen this happen a number of times; “There will always be times when there has been a delay with the postcode being set up, which is when having a broker look after you can be of great benefit.”
“There are a number of things we can do, for example we can use a postcode from the nearest available street to refer over to the insurers to stop the ‘computer says no’ scenario. The insurer will then work behind the scenes to ensure that the correct address and postcode is used for the policy. It is a little more complex than it sounds, but the important thing to know is that we do all the hard work with your insurer to get your policy up and running so that you can focus on moving.”
Why insurers need a postcode
“Insurers have a wide range of risk criteria which they use to generate premiums depending on the type of policy”, explains Craig. “Every postcode will have its own unique risks – for example, it could be that it is a ‘high crime postcode’, so insurers would likely need to pay out for a lot of theft claims.”
“If you are looking at postcodes specifically in relation to home insurances, a particular postcode could also indicate any adverse history such as being a flood risk or a subsidence area. That’s not to say these areas can’t be covered, it just means that a little more care, attention, and negotiation is needed, that’s where a broker can come in very handy.”
And as a word of warning, should you use a friend’s postcode in the hope of obtaining a cheaper quote for your car insurance (believe it or not, this does happen), this could prove far more costly should you need to make a claim.
Do I need buildings insurance on a new build?
As outlined by Craig, “The builders should be covering everything right up until the exchange date, so any damage to the property, such as fire or flood, would be rectified by their scheme.”
“On exchange, you will be responsible for the buildings insurance. Once you have completed on the property and begin to move then its worthwhile getting contents insurance to cover all your new belongings. Many people take out the policies at the same time, which can be sensible if the property is likely to remain empty during a slower moving process. There are other benefits to having both the buildings and contents insurance together, most insurers will give you a discount by having a combined policy – and you will also only have to pay one excess in the event of a claim.”
You may well find that your mortgage provider requires evidence that your new build home is insured prior to exchange, and some may suggest their own policies. You don’t need to agree to one of their products to satisfy this agreement, you are free to shop around (including talking to your friendly neighbourhood A-Plan team), and you can then submit this to your lender.
What is an NHBC warranty?
One of the upsides of buying a new build home is that certain repairs are carried out by your developer for around 2 years, and following that, the NHBC.
It’s important to note that they will only carry out repairs on the structural building work, such as faulty fitted windows, poor brickwork, or cracks that appear in the render.
Buildings insurance differs in that it will cover your new home should you experience a flood, fire, subsidence or storm damage, for example. And of course contents insurance is an entirely different matter, covering the value of your items within your home against theft or damage from said flood, fire, subsidence, storm or theft.
The one thing that is certain is that your new build postcode has already been agreed prior to the developer listing the home, it’s a requirement before any services access the home so, although it may take a little longer for it to show up than anticipated, it will.
As brokers we are here to work on your behalf to make your life that little bit easier. There are things that we can do to move things in the right direction and enable you to obtain new build insurance. Not only have we have helped over 150,000 clients find the right policy, over 22,000 of our clients have rated us as ‘Excellent’ on Trustpilot.
Feel free to get in touch with us. You can find your local branch here.
