Home Buying Guide: Removals Insurance & Other Legal Matters

Removals Insurance

Some household contents insurance policies will insure your possessions for the period of the move, but if yours does not you should take out extra insurance cover for any mishaps that might occur during the move. Most insurers will extend your cover for the removal period, for an additional premium to cover the increased risk. This premium is normally around £25. It is difficult to obtain this cover from insurance companies with whom you do not already have an insurance policy. Check what the policy covers and the time limit within which a claim must be made.

The policy will probably NOT cover:

  • scratches and dents
  • bank notes, shares, bonds, deeds, stamps and securities
  • loss or damage due to strikes, weather conditions, or delay
  • goods that are not professionally packed - make sure everything is packed, and unpacked, by professional removers or your claim may be jeopardized.

Removal firms may offer insurance as part of their contract. If they do, check the limit on what compensation you will be able to claim as it is often quite low. Ask to see in writing exactly what will be covered and the time limit for making a claim.

With most removals insurance you have to pay a part of any claim, known as the excess, which is usually £50 or more.

Legal Protection Insurance

It is possible to take out insurance cover on all the legal aspects of buying a house. This will cover any legal action that you need to take related to buying your home. It can be used against builders and developers, sellers, removal firms, utilities (water, gas, electricity companies), surveyors, solicitors and conveyancers.

Other Legal Matters

Your Will

When you buy a home for the first time you acquire a large asset. If you do not already have one, it is a good idea at this point to draw up a will to specify who will receive which parts of your estate (what you own less what you owe) when you die. It is not too difficult to draw up a will yourself, but consult a guide to making wills as it is important that it is done properly - look in any good bookshop for a guide. If you are unsure, or think that your situation is complex, consult a solicitor.

Inheritance Tax

Although set up as a tax on the wealthy, spiralling house prices mean many families are now liable for inheritance tax. The first £325,000 of the estate is inheritance tax-free. The government charges 40 per cent tax on anything over that.

Money over the threshold left to a spouse, through either marriage or a civil partnership is exempt. This is called the spousal exemption. In 2007 the threshold for married couples and those in a civil partnership changed. When the surviving member of a couple dies, their threshold for inheritance tax is double the threshold for a single person. This effectively makes the inheritance tax from their deceased partner transferable.

Some bequests and life-time gifts are tax-free, such as those between husband and wife. If one spouse leaves everything to the other, this avoids tax at the time of death of the first spouse but the problem is carried over to when the second one dies. When making your will, therefore, it is advisable to spread your assets, for example by leaving them to children as well as your spouse.

The estate can pay a reduced rate inheritance tax of 36% on some assets if 10% or more of the net value is left to charity in a will.