Home Buyers Protection Insurance

SaintJudy

Hi everyone

FTB here, so I'm trying to navigate the whole process and learning new things as I go!

I saw an article on the Homeowners Alliance website the other day about Homebuyers Protection Insurance. I've searched the forums but it doesn't seem to be a thing that people really talk about or mention, so my question is, is it worth getting? Or is it a bit of a play on the fears of people like me? 

This was the article I read - https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/homebuyer-protection-insurance/

iwb100

It comes down to an individual decision. You pay extra money to safeguard potential costs - that you know are at risk if the move falls through. I'd not bother personally since the policy windows are always limited and if there are issues in the chain (drags on longer) which tends to be where greater risk of falling through is - you end up not covered. But if money is very tight then it may well be worth it to give you some protection if things went wrong. Ultimately a lot of costs (barring a survey) won't necessarily be required up front immediately anyway - so keep that in mind - your solicitor won't start searches immediately usually - not until there is dialogue and some sense that the chain will progress. 

greatcrested

This does get discussed here periodically.

Concensus is it's not worth it though naturally some people use it.

Do a forum search.

eddddy

SaintJudy said:

I saw an article on the Homeowners Alliance website the other day about Homebuyers Protection Insurance. I've searched the forums but it doesn't seem to be a thing that people really talk about or mention, so my question is, is it worth getting? 

TBH, The Home Owners Alliance own webpage seems to confirm that that they're misleading you (or conning you) about this insurance. It suggests:

What is the risk of a purchase falling through?

3 in 10 property purchases fall through

The average claim amount in 2019 was £465 for those who took out Homebuyer Protection Insurance with Homeowners Alliance and needed to make a claim.

Protect yourself with Home Buyer Protection Insurance for just £47

Link: https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/homebuyer-protection-insurance/

So if you do the maths...

• They sell 10 policies at £47 each - so they collect £470 in premiums
• 3 in 10 of those purchases fall though
• So against those 10 policies, they pay out an average of £465 x 3 claims = £1,395
• So for every 10 policies they sell, they make a loss of £1,395 - £470 = £925

If that were true, they would have gone bust a long time ago. So they're being dishonest somewhere - which is why I wouldn't trust the products they're selling.

(FWIW, in the past I've searched the internet for reviews by people who've made claims on this type of insurance. I could only find negative reviews about rejected claims, no positive reviews about successful claims. But maybe that's what you expect. And I haven't searched again recently.)

davidmcn

Just as an example of how restrictive the cover is, it includes the risk of "Local authority search indicates the property is subject to a compulsory purchase order" - but apparently none of the dozens of other things which might be revealed by the search.