First-Time Buyer Home Insurance Ireland: What You Need Before You Close

What home insurance do first-time buyers in Ireland need?

First-time buyers in Ireland need buildings insurance in force before the sale closes, because a lender will not release mortgage funds without proof of cover. Most buyers take a combined buildings and contents policy on the property, and separately arrange mortgage protection life cover, which is normally a condition of the loan too. Buildings cover is priced on what it would cost to rebuild your home, not on what you paid for it.

Those are two different products doing two different jobs, and a lot of new buyers only find that out in the final week before closing. Here is what each one does, when you need it, and what to get right first time.

Why does your lender insist on home insurance?

The house is the security for your mortgage. If it burns down and there is no policy, the bank is left lending against a site. So every Irish lender makes buildings insurance a condition of drawdown, and the loan offer will say so in writing.

Two practical points follow from that:

• Your solicitor will usually need to see evidence of cover before the sale can complete, so the policy has to be arranged in advance rather than on the day.
• The lender’s interest is normally noted on the policy, which simply records that they have a financial stake in the property.

You are free to buy that cover wherever you like. A bank may offer you its own policy, but you are not obliged to take it, and shopping the market is worth doing while you are already gathering paperwork.

What is the difference between buildings and contents cover?

Buildings insurance covers the structure and everything permanently attached to it: walls, roof, floors, the fitted kitchen, the bathroom suite, and usually garages, sheds, gates and boundary walls. Think of it as everything that would stay behind if you tipped the house upside down.

Contents insurance covers what falls out: furniture, appliances, clothes, electronics, carpets, curtains and personal belongings.

Only buildings cover is required by your lender. Contents cover is optional in the strict sense, but for a first-time buyer who has just spent everything on furnishing the place, it is usually the section that pays out first in real life. Our home insurance page goes through both sections in more detail.

Buildings, contents and mortgage protection compared

Cover	What it protects	Required?	Sum insured is based on
Buildings	The structure of the house and permanent fixtures	Required by your lender as a condition of the mortgage	Rebuild cost, not market value or purchase price
Contents	Furniture, appliances and personal belongings	Optional, but strongly advised	What it would cost to replace your possessions
Mortgage protection	The mortgage balance if a borrower dies during the term	Generally required by law for a home loan, with limited exemptions	The amount and term of your mortgage

How do you work out your rebuild cost?

This is the number new buyers most often get wrong, in both directions.

Your buildings sum insured is the cost of rebuilding your house from the foundations up, including demolition, site clearance and professional fees. It is not the price you paid, and it is not what the house would sell for today. Site value is a large part of a purchase price in many parts of Ireland, and you are not insuring the site.

The Society of Chartered Surveyors Ireland publishes a free house rebuilding calculator that gives an indicative figure by region and house type, and it is the reference most Irish insurers and brokers point buyers towards. Use it as your starting point, then adjust for anything unusual about the property.

Things that push a rebuild cost above the guideline figure include:

• Non standard construction, such as thatch, timber frame or stone
• Protected structures, where materials and methods may be specified
• Extensions, attic conversions or high specification finishes added since the house was built
• Difficult access for machinery and materials

Building costs have been rising in Ireland for several years, so a figure that was right when a policy was first written can drift out of date. Review it at every renewal rather than letting it roll on untouched.

What happens if you underinsure?

If your sum insured is materially below the true rebuild cost, an insurer can apply average, which means a claim can be settled proportionately rather than in full. That applies to partial claims too, not just to a total loss, which is why underinsurance quietly hurts far more people than it should. Getting the figure right at the outset is the single most useful thing a first-time buyer can do.

What does mortgage protection cover, and is it the same thing?

No. Mortgage protection is life cover that clears the outstanding mortgage balance if a borrower dies during the term. It protects the people living in the house rather than the house itself.

Under Irish consumer credit law, a mortgage protection policy is generally required when you take out a home loan, though limited exemptions exist, for example where a borrower is over a certain age or cannot get cover on reasonable terms because of their health. Your lender will confirm what applies to you.

As with buildings insurance, you do not have to buy it from the bank offering the mortgage. Because the premium runs for the full term of the loan, it is worth comparing before you sign. You can read more on our life insurance page.

When should a first-time buyer arrange cover?

Earlier than most people expect. A useful sequence looks like this:

1. When your loan offer issues, check exactly what the lender requires and by when.
2. Apply for mortgage protection straight away, because life cover involves underwriting and medical questions and can take longer than you think.
3. Arrange buildings and contents cover to start on the day the sale closes, so there is no gap between the keys changing hands and the policy going live.
4. Send confirmation of cover to your solicitor and lender.

If you are buying a new build that is not finished yet, tell your broker. Cover on a property still under construction works differently, and a house sitting empty before you move in has its own conditions attached.

What affects the price of a first-time buyer home policy?

Home insurance in Ireland is rated on the property far more than on the person, which is good news if you are young and have no insurance history. The main factors are:

• Rebuild cost and contents sum insured
• Location, particularly proximity to a river, coast or known flood area
• Age and construction type of the house
• Claims history on the property and on you
• Security, alarms and whether the house is occupied during the day
• Any optional extras such as accidental damage, all risks on personal items or home emergency assistance

Higher voluntary excesses and paying annually rather than monthly can both reduce what you pay, though the right answer depends on your circumstances rather than on a rule of thumb.

Do you need a broker for your first home?

You do not have to use one. What a broker adds is that a single conversation reaches a panel of leading Irish insurers instead of one, and that someone reads the small print with you on things a first-time buyer has never had to think about, such as flood terms, unoccupancy conditions or how an excess actually applies. If you do need to claim, you have someone to call who knows the policy.

The bottom line

Buildings insurance is a condition of your mortgage, so it needs to be in place before you close. Set the sum insured on rebuild cost rather than purchase price, and check it every year. Add contents cover, because that is what you will actually claim on. Treat mortgage protection as a separate job and start it early, since it takes the longest to put in place. Get those four things right and your first home is properly protected from day one.

If you would like a hand with any of it, talk to Breeze Insurance on 0818 700 300 or request a quote online. We will walk you through what your lender needs and make sure the cover starts on the right day.

Frequently asked questions

Is home insurance a legal requirement in Ireland?

Home insurance is not required by law in the way motor insurance is. In practice, though, buildings cover is a contractual condition of every Irish mortgage, so if you are borrowing to buy, you need it.

Can I use the bank’s home insurance policy?

You can, but you are not required to. Lenders must accept cover from another provider once it meets the conditions set out in your loan offer. It is worth checking the market before you commit.

Should my buildings sum insured match the price I paid for the house?

No. The purchase price includes the value of the site, which you are not insuring. Use a rebuild cost figure, such as the one from the Society of Chartered Surveyors Ireland calculator, and adjust it for anything unusual about the property.

When exactly does the policy need to start?

Cover should be in force from the day the sale closes. Your solicitor and lender will normally want written confirmation before completion, so arrange it in the weeks beforehand rather than on the day.

Is mortgage protection the same as home insurance?

No. Home insurance covers the building and your belongings. Mortgage protection is life cover that repays the outstanding mortgage if a borrower dies during the term. Most buyers need both.

What if I am buying an apartment?

Buildings cover for an apartment is usually arranged by the owners management company through a block policy, and the cost comes through your service charge. You still need your own contents cover, and you should check what the block policy does and does not include.

Breeze Insurance Ltd. is regulated by the Central Bank of Ireland.