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Insurance & Other Legal Matters

When purchasing a new home, it is essential to consider the necessary insurance and other matters associated to obtaining your home, particularly if you are a first-time buyer.

This part contains overviews to the types of insurance policies which are correlated in paying, buying and owning a property. You have made a huge investment so you need to look after it carefully.

Household Insurance (Contents and Buildings)

You now have obtained a new property. The next part is to protect it along with all your other belongings.

Household insurance has two basic parts: contents insurance and buildings insurance. You can have them separately, although some insurance companies offer one single policy enclosing both services, which can significantly save you a lot of money.

Contents Insurance insures all the belongings inside your property, as well as the things you take with you outside. You may be amazed how much your belongings are worth regardless if you are not a huge spender; these can be added up to tens of thousands. ‘Contents’ refers to everything from carpets and furniture to cameras, jewelries, and clothes. You can personally decide what your insurance policy covers and the rate depends on how much it comprises.

To know exactly how much cover you need, create a list of everything you own in the property and its individual value. If you already have this kind insurance on your former home, make certain that it will be transferred from your previous property into your new one on the day you move in.

Buildings Insurance covers the property itself, as well as the basic essentials such as bathroom and kitchen fittings. It also offers cover for unexpected events such as flood, fire, or even subsidence.

If your property is part of a bigger building (such as flats) your building insurance may be obtained in a joint policy by each person in the building.

Legal Expenses Insurance is part of the ‘building insurance’ which covers access to private legal remedies for events such as neighbour disputes and nuisance.

Which Insurance Policy?

There is a vast amount of choices with regards household insurance, so searching for the one that suits your needs can be a bit overwhelming. If you already have household insurance in your former home, this can be moved upon your transfer.

Just be sure that you are getting the utmost deal for your new home which may be under a different premium than your last one. Get lots of quotes from several insurance companies for more options.

Top Tip: Some lenders offer their own insurance services, but it is not essentially wise to get your home insurance coming from your mortgage lender. Their premiums are often more expensive than to those services sold by insurance companies. If your lender is presenting you the convenience of an insurance service bought from them, look very cautiously at how much it would cost you and equate it to some other insurance services elsewhere.

Protection in case of Illness or Unemployment

Mortgage Payment Protection Insurance (MPPI)

The impending future is constantly unknown. You could unexpectedly face a crisis wherein you won’t be able to pay your monthly mortgage payments. It is a very sensible precaution to insure against losing your property should such conditions arise.

It is tremendously inadvisable to rely solely on the Social Security system. You should consider pulling out Mortgage Payment Protection Insurance (MPPI) to cover your mortgage fees should you become incapable to continue repaying them.

Specific standards have been formulated for MPPIs by the Council of Mortgage Lenders and the Association of British Insurers.
These specify that such policies should:

  • Begin paying after no more than 60 days (to give you time to find two months’ worth of payments)
  • Continue paying your dues for at least 12 months
  • Provide at least 6 months’ notice of any alteration in the service offered
  • Assess medical condition and not automatically decline conditions such as pregnancy complications and backache
  • Self-employed people should be covered under ‘unemployment’ if they have notified the Inland Revenue that they have listed for the jobseeker’s allowance and have unwillingly stopped trading.

You have to guarantee that your insurance policy covers as many circumstances as possible. Be sure to check the exclusion clauses as well; for instance, a lot of insurers will not cover unemployment if it is due to some medical conditions which you already had prior to obtaining the policy, stress or back pain, and even to pregnancy.

Life Insurance

For those people planning to apply for mortgages in order to purchase properties, life insurance is an essential purchase to make. Most lenders insist that borrowers should get life insurance.

This specific insurance may seem like a pointless service, but it is seriously worth considering. The point this service is to offer enough protection to cover unresolved mortgage payments should you pass away before completing your mortgage balance. This is mainly important if you have your own family or significant others, as it would ensure that they still could have a home in the event of your passing.

  • Waiver of premium means that if you turn out to be too ill to work or involuntarily unemployed and you do not have some sort protection for illness or unemployment, your life insurance will still be paid off even if you do not have the funds for them. You just have to pay about extra 2.5 percent to have this waiver of premium in your current policy.
  • Terminal illness benefit incorporated in the policy at no added price: this means that if you are diagnosed with a terminal illness then your insurance will still be paid out when you pass away, despite the fact that the insurer already knows your condition beforehand.

Removals Insurance & Additional Legal Matters

Only some household insurance covers your belongings for the period of the move, so if yours does not, you should take out an extra insurance for any casualties that might arise during the move.

The policy, however, might NOT cover:

  • Bank notes, bonds, shares, stamps deeds, and securities
  • Dents and scratches
  • Damage or loss due to strikes, delay, or weather conditions
  • Belongings that weren’t professionally packed (make sure your things are packed by professional removers or your privilege may be put at risk)

Check the maximum compensation that you would be able to receive as it is frequently quite low. Ask them to write exactly what will be covered, as well as the time limit for taking a claim.

Legal Protection Insurance
It is likely to take out insurance cover on every legal aspects of purchasing a property. It can be used against developers and builders, removal firms, sellers, utilities (water, electric companies, gas,), surveyors, conveyancers and solicitors.

Other Legal Matters

Your Will
When you purchase a property for the first time, you already attained a huge asset. If you do not already have one, it is wise to draw up a will in order to identify exactly who will receive your property when you pass away. It is not hard to put together a will yourself, but referring to a guide is also important for it to be made properly. If you are quite hesitant to make one yourself, then consider on consulting a solicitor.

Inheritance Tax
Though this specific tax is a common set up for the wealthy, current house prices may mean a lot of families are now accountable for such tax. The first £325,000 of the inherited property is tax-free. The government charges 40% tax on prices above that range.

Some inheritances are tax-free, for instance, those between married couple. If one significant other gives everything to the other, this evades tax at the time of death of the first next of kin, but the problem happens to when the second one expires.
Thus, when drawing up your will, it is logical to spread your possessions through your children(s) and of course, to your spouse.

Table Of Contents

  1. Decide How Much You Can Afford
  2. Choosing Your Home
  3. Negotiating and Making an Offer
  4. Surveys And Valuation
  5. Conveyancing
  6. Insurance & Other Legal Matters
  7. Gazumping & Other Problems
  8. Making Complaints