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Building house - insurance needed for mortgage?

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  • 06-01-2010 3:24pm
    #1
    Lemlin
    Registered Users Posts: 22,249 ✭✭✭✭


    Hoping to start the house in the next few months. However, part of my mortgage from AIB states that I need insurance before I draw down. What type of insurance is this? Can I just get it from a normal company like Quinn?

    Is it more expensive than normal house insurance?


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    #2
    Poor Uncle Tom
    Registered Users Posts: 14,547 ✭✭✭✭Poor Uncle Tom


    You need house building insurance, it's usually a once off payment and will last for about 2 years. Ring around for quotes.


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    #3
    Quazzie
    Registered Users Posts: 28,882 ✭✭✭✭Quazzie


    If you go through a broker they usually sort it out for you off someone they know at a discount. If you are going AIB direct do as PUT suggests and shop round for the best quote.


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    #4
    clint_eastman
    Registered Users Posts: 308 ✭✭clint_eastman


    Lemlin wrote: »
    Hoping to start the house in the next few months. However, part of my mortgage from AIB states that I need insurance before I draw down. What type of insurance is this? Can I just get it from a normal company like Quinn?

    Is it more expensive than normal house insurance?

    Hi,
    2 questions....

    Are you referring to mortgage protection life insurance or self build insurance?

    The life insurance is a prerequisite to drawing down anything on your mortgage whereas the self build insurance is just needed for when you build your house, although its not needed if you are getting a builder to build the house as a contract start to finish.


    Have you already drawn down on the mortgage for the site purchase?

    The reason I ask is that when I went to draw down on my mortgage to pay for the site, the bank said that I required self build insurance beforehand. This made no sense as I would be technically insuring just a field given that I wouldn't be starting building for 6 months. However once I agreed to get self build insurance as mentioned above before I started the house, the bank were happy to allow me to draw down on the site purchase, I will need tgo show them proof of my self build insurance before I can draw down any stage payments on the build.

    One last thing, there is alot of detail on companies and pricing in the "prices/costs" sub-forum, if this is what you're looking for.


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    #5
    muffler
    Registered Users Posts: 45,916 ✭✭✭✭muffler


    Lemlin wrote: »
    Hoping to start the house in the next few months. However, part of my mortgage from AIB states that I need insurance before I draw down. What type of insurance is this? Can I just get it from a normal company like Quinn?

    Is it more expensive than normal house insurance?
    Like the above posters Im assuming its building/construction insurance you are referring to as opposed to mortgage protection or standard house/contents insurance.

    If its house building insurance then dont let the bank talk you into taking out cover with them. More often than not they are dearer than other companies but get a quote from them. As advised shop around for a few quotes - try a broker but before you do so get a couple of quotes online to give you a marker so to speak. Google is your friend. :)

    Oh and it is a lot dearer than standard house insurance.


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    #6
    sunnysoutheast
    Registered Users Posts: 2,072 ✭✭✭sunnysoutheast


    As other posters have said you will probably need life insurance to cover the loan amount, just as you would on a house purchase.

    What your bank may be referring to here is public liability insurance as you will be liable for any injury, even to trespassers, as soon as the site purchase is complete. We fenced off our site within days of site purchase completion for this very reason, we couldn't get a standalone PL policy.

    House build or "contractor's all risks" insurance is normally made up of three components:
    - Public liability
    - Employer's liability
    - Theft and damage

    The off-the-peg policies normally run for two years and I think we paid about 80c per sq.ft. three years ago. One thing to watch is that you normally need to take out the insurance before you put a spade in the ground, we had a contractor shell build so we were able to negotiate the cover to start when he had finished, handed over, and we were doing 2nd fix.

    If you have a contractor he will have cover in place, but that will only cover the scope of the work he is doing. Most contractors won't let any other direct trades in until they have finished, due to complexities and risks with access, so this could cause complications if you want to carry out some of the work yourself.

    Also bear in mind that not having this insurance is a major false economy, it will only take a subby to fall off scaffolding and you may as well just hand over the house.

    SSE


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    #7
    Lemlin
    Registered Users Posts: 22,249 ✭✭✭✭Lemlin


    Thanks for the replies. Yep, it's house building insurance I am referring to - I have the life insurance in place.

    I have to get it before the end of February as we have to have everything in place for then to draw down - if I don't draw down within six months the mortgage becomes invalid and I have to reapply which I don't want happening.

    I'm building the house direct build, not through a contractor. The site is already in my name as its on a family farm.

    What companies do the house building insurance? Do Quinn do it? I have my car, house and health with them so get discounts.


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    #8
    sunnysoutheast
    Registered Users Posts: 2,072 ✭✭✭sunnysoutheast


    Not sure about Quinn. We got ours from Aviva.

    Good luck with the build!

    SSE


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    #9
    clint_eastman
    Registered Users Posts: 308 ✭✭clint_eastman


    Lemlin wrote: »
    Thanks for the replies. Yep, it's house building insurance I am referring to - I have the life insurance in place.

    I have to get it before the end of February as we have to have everything in place for then to draw down - if I don't draw down within six months the mortgage becomes invalid and I have to reapply which I don't want happening.

    I'm building the house direct build, not through a contractor. The site is already in my name as its on a family farm.

    What companies do the house building insurance? Do Quinn do it? I have my car, house and health with them so get discounts.

    There's loads of info here http://www.boards.ie/vbulletin/showthread.php?t=2055703467 on the different companies and costs.


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    #10
    MasterBlaster01
    Closed Accounts Posts: 6 ✭MasterBlaster01


    I am getting my mortgage from AIB, drawdown is next week and we will undergo a major renovation work on the property so will not inhabit for up to 6 months (hopefully!) and as it happens they were also the only provider (underwriter's is AXA) that would quote reasonably on 'building works' insurance. It covers only fire, smoke, flood and storm but as we are not living there this is sufficient.
    The quote was surprisingly low compared with standard cover of the same value and I will pay the premium monthly and as the value is added over the course of the works I will upgrade the rebuilding cost on the policy to to match. AIB were fine with this.
    I know the circumstances are different with a new build but it is still a building project so I would take this approach with AIB.

    MB


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