What is Home Buyers’ Insurance and Do I Need it?

Estimated reading time 5 minutes

Buying and selling a home can be an expensive process. Of course, buyers will need to pay for the value of the property itself, but there are also many other costs involved, such as conveyancing costs and mortgage fees. This can make it even more frustrating when a house sale falls through before completion. Both the buyer and the seller will have likely spent money throughout the process, which will go to waste if the sale doesn’t complete.

That’s where home buyers’ insurance and home sellers’ insurance come in. Both offer a level of protection to the parties involved in the sale, helping them to reimburse lost costs if a sale falls through. Of course, our preferred method to guarantee a house sale is to use a cash house buyer – but more on that later. First, we’ll explain what’s involved with home buyers’ insurance and home sellers’ insurance.

What is home buyers’ protection insurance?

Home buyers’ insurance, or home buyers’ protection insurance, provides cover for the buyer in the case that a sale falls through. With home buyers’ insurance, the buyer can claim back some of the conveyancing fees and survey costs, as well as costs they may have paid for a mortgage valuation and mortgage fees.

Unfortunately, many sales can fall through, leaving the buyer out of pocket. It could be that they have been gazumped, with another buyer making a higher offer, or it could be that the seller has decided not to sell due to a change of circumstances. Home buyers’ insurance gives the buyer a level of protection should this situation arise.

Your insurance policy will detail various “insured events” that will trigger a payout. For example, if your mortgage is dependent on a successful survey being carried out, and then a bad survey invalidates the mortgage, you could claim back some of the mortgage fees. It could also cover a “chain break” where a sale ahead of yours in the property chain falls through, resulting in your sale no longer going ahead.

How much does home buyers’ insurance cost?

The cost of home buyers’ insurance will vary depending on your provider. Typically, home buyers’ protection insurance will cost between £55 and £75.

How much the policy covers will again depend on your provider. However, typically home buyer insurance will cover up to £3,000 in fees.

Is home buyers’ insurance worth it?

Around 40% of property sales fall through before completion. This can make home buyers’ insurance a worthwhile cost, as it could reimburse buyers thousands of pounds that they would have otherwise lost.

When should I take out home buyers’ insurance?

You should take out home buyers’ insurance as soon as possible after you have decided to buy a home. If you have already made your mortgage application or instructed your solicitor to begin conveyancing, you will have 14 days from the date you submitted to take out home buyers’ insurance.

If you have already had a survey carried out on the property you want to buy, it will be too late to take out home buyers’ insurance.

What is home sellers’ protection insurance?

Home sellers’ insurance is similar to home buyers’ insurance, but it covers the seller instead of the buyer. There can be many reasons why a house sale falls through, and often it can be the fault of the buyer.

Home sellers’ protection insurance means the seller can claim back any costs that I have already paid in relation to the sale, including conveyancing fees.

Like with home buyers’ insurance, there will be certain insured events that will trigger a payout. This could include the buyer changing their mind, the buyer becoming too ill to carry on with the sale, the buyer’s mortgage lender valuing the property below the accepted offer and a survey or search highlighting a structural defect.   

When should I take out home sellers’ insurance?

You can take out home sellers’ insurance within 7 days of accepting an offer on your home, or prior to accepting an offer. As with home buyers’ insurance, if a survey has already been carried out on your home, you can no longer take out a home sellers’ insurance policy.

How much does home sellers’ protection insurance cost?

Home sellers’ insurance can cost between £55 and £75, depending on the level of cover and the provider you choose. Policies will typically cover up to £1,000 in fees that have been lost due to the sale falling through.

Do I need home sellers’ protection insurance?

According to the Property Reporter, 40% of sales that failed before completion were due to the buyer changing their mind and pulling out. This can leave the seller out of pocket through no fault of their own. Home sellers’ insurance is one way of the seller protecting themselves from losing money due to a failed sale. There is, however, an alternative route to take…

Guarantee your house sale with Gaffsy

With Gaffsy, you won’t need to worry about taking out home sellers’ insurance. We buy any house in any condition, with a guaranteed cash offer. When you sell your home to us, there will be no issue if a survey shows there is structural damage – we can still buy your home.

Selling your home with Gaffsy is also chain-free, so there’s no danger of any external sales affecting yours. We can sell your house fast and free, with no hidden costs and we’ll even contribute up to £1,500 to your legal fees. We’ll work to your timeframe and complete on your chosen date. We’ll ensure a fair deal for your home, with no danger of the sale falling through.

Get a free cash offer today for a guaranteed house sale.

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