Shared ownership schemes have been increasing in popularity in recent years, as more and more people struggle to get onto the property ladder. However, if you're considering purchasing a shared ownership property, it's important to understand the insurance requirements and options available to you.
What is shared ownership?
Shared ownership is a scheme that allows you to buy a share of a property (usually between 25% and 75%), and pay rent on the remaining share. This can be a more affordable way to get onto the property ladder, as the deposit and mortgage payments are based on the share you own, rather than the full value of the property.
What insurance do you need?
If you're purchasing a shared ownership property, you'll need to have buildings insurance in place. This covers the cost of repairing or rebuilding the property if it's damaged or destroyed by events such as fire, flood, or subsidence.
What does buildings insurance cover?
Buildings insurance typically covers the cost of repairing or rebuilding the property, including the structure, roof, walls, floors, and fixtures and fittings such as kitchens and bathrooms. It can also cover the cost of clearing debris and any damage to outbuildings such as sheds, garages, or fences.
Do you need contents insurance?
Contents insurance isn't a legal requirement, but it's highly recommended. This covers the cost of replacing your belongings if they're stolen, damaged or destroyed. It's important to note that if you're purchasing a shared ownership property, you'll only need contents insurance for the share of the property that you own.
What insurance options are available?
When it comes to shared ownership building insurance, you have a few options:
Option 1: Insure through the housing association
Some housing associations offer their own buildings insurance policies, which you can take out as part of your shared ownership agreement. This can be a convenient option, but it's important to check the policy carefully to ensure it meets your needs.
Option 2: Insure through a specialist provider
There are specialist insurance providers who offer shared ownership building insurance policies. These policies are designed specifically for shared ownership properties and can offer more tailored cover.
Option 3: Insure through a standard provider
You can also choose to insure your shared ownership property through a standard insurance provider. However, it's important to check that the policy covers shared ownership properties, as some standard policies may not.
Conclusion
If you're considering purchasing a shared ownership property, it's important to understand the insurance requirements and options available to you. Make sure you have buildings insurance in place, and consider taking out contents insurance too. Take the time to compare different insurance policies and providers to ensure you get the cover that's right for you.
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