Home Sellers Protection Insurance is designed to protect the money you've already spent if your house sale falls through. Surprisingly, this happens in around 1 in 3 property transactions.
If this happens and you're covered by the insurance, you'll usually be refunded for common costs such as conveyancing and legal fees.
According to our data, the average total solicitor fees for selling a house are £1,400, and the good news is that many of these costs can be recovered. If you're concerned, Compare My Move can connect you with up to 6 conveyancers who can support your sale and advise on insurance policies.
Here, we explain how the insurance works, what it covers, and the key exceptions to be aware of if you're selling a property.
How Does Home Sellers Protection Insurance Work?
Once you accept an offer on your property, you should instruct a solicitor as soon as possible to begin the conveyancing process. From that point, you’ll start incurring costs, including disbursements, many of which are non-refundable if the sale falls through.
Home Sellers Protection Insurance helps cover these costs. It starts as soon as it’s taken out (within 7 days of accepting the offer) and typically costs around £66*, equating to 4.7% of average conveyancing fees.
The policy lasts about 180 days and can be renewed or extended if your sale doesn’t complete in that time. Note that once you make a claim, the policy ends, and you will need a new one for future transactions.
When to Use Home Sellers Protection Insurance
Here’s how Home Sellers Protection Insurance fits into the selling process:
Accept the offer on the property
Purchase Home Sellers Protection Insurance within 7 days
Begin the legal process of selling, including conveyancing and surveys
If the sale falls through for a covered reason, submit a claim to recover your costs
Take out a new policy for any new property transactions
*Data taken from Rhino Home Protect, Lloyd Whyte Community, PSG Connect and Oops Insurance
The property must be located in England, Wales or Northern Ireland. As the process of selling a home in Scotland differs from the rest of the UK, sellers in Scotland cannot apply for Home Sellers Protection Insurance.
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What Does Home Sellers Protection Insurance Cover?
When a property sale falls through beyond the seller's control, they can be left out of pocket. This insurance was created to help cover those losses and offers peace of mind during the selling process.
While policies vary, they typically cover situations such as:
Adverse Search of the Property
During the house-buying process, the buyer’s conveyancer will undertake conveyancing searches. These involve the property and the surrounding areas.
If any adverse issues are flagged during the conveyancing searches, the buyer may choose to withdraw their offer on the house.
Buyer Mortgage Valuation Issues
If the buyer purchases a property with a mortgage, a mortgage valuation must be carried out. There can be discrepancies between the market value the estate agent has set and the mortgage valuation.
This valuation ensures the property is being sold at the correct value for the lender. If the lender values the property lower than the market price, the buyer can’t borrow enough money to purchase the property.
Structural Problems
While not legally required, it's recommended that the buyer arranges a Property Survey. A RICS Home Survey will highlight any potential problems with a property, including its structural integrity. A buyer may opt out of buying if the property is unsafe or significant changes need to be made to it.
Personal Reasons
Personal reasons can be unavoidable and can cause a buyer to pull out of the sale. These may include redundancy, changes in income, illness, or bereavement.
What Costs Are Not Covered By Home Sellers Protection Insurance?
Home Sellers Protection Insurance doesn’t typically cover the following:
Commercial or business-use properties
Any pre-existing payments before the policy began
Conveyancing costs that can be refunded
Pre-existing surveying or conveyancing problems
Seller deliberately stopped the sale
Costs that can be claimed from existing policies
The seller chooses to take redundancy
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Eligibility for Home Sellers Protection Insurance
Here are the eligibility criteria for this insurance type:
You must be over 18
The property must be a permanent structure (not temporary or mobile)
A solicitor or conveyancer must assist with the house-selling process
The property cannot be part of a sealed bid or contract race
The sale can involve either a buy-to-let investment or a private residential property
The buyer may be using either a mortgage or cash to complete the purchase
Find a Conveyancer to Help Sell Your Property
If you’re looking to hire a conveyancing solicitor to assist you with your house sale, we can help. Here at Compare My Move, we can connect you with up to 6 conveyancers in your local area. They can advise you on the right policy for your property. Simply fill out our online comparison form to compare quotes and save today.
FAQs
Can I Get Insurance After Accepting an Offer?
Yes, you can take out Home Sellers Protection Insurance after you’ve accepted an offer, but there are limitations to this. You will only have seven days after accepting the offer to arrange the insurance for it to be valid.
What Happens if I’ve Already Paid Some Fees?
The insurance policy will only cover the cost of the fees you have paid after you took out the insurance. Any costs paid before the policy starts won’t be covered. You will be unable to claim these costs back.
Will I Be Covered if I’m in a Contract Race?
If you’re in a contract race where you have accepted more than one offer or have accepted a sealed bid, you will not be eligible for Home Sellers Protection Insurance.
Who Pays for the Insurance, the Buyer or Seller?
For Home Sellers Protection Insurance, it is the seller's responsibility, as their costs are being protected. Buyers will need to purchase Home Buyers Insurance to protect their expenses in case of gazumping or other reasons.
What Are Some of the Reasons for House Sales Falling Through?
There are many common reasons why house sales can fall through. Some of these include:
- A breakdown in the property chain
- Delays in the conveyancing process
- Gazumping
- Finance issues from the buyer
- A bad survey
*It’s useful to note that Home Sellers Protection Insurance doesn’t cover all of these scenarios.
