Questions about homebuyer protection insurance

Learn what homebuyer protection insurance covers and get advice on what to do before, during, and after a claim.

Please be aware that IDA does not provide homebuyer protection insurance. If you require an insurance quote, please get in touch with our partner, Gjensidige Forsikring, via the provided contact form.

What is homebuyer protection insurance?

Homebuyer protection insurance protects the buyer and mortgage lender from property value loss due to defects.

Click here to find out what homebuyer protection insurance is and what you can use it for.

What is the difference between building and homebuyer protection Insurance?

The main difference between building insurance and homebuyer protection insurance is what they cover. Building insurance covers damage that may occur after you take over the house, such as damage caused by a storm or heavy rain. On the other hand, homebuyer protection insurance covers damage to the house before you took ownership, for example, if the previous owner installed illegal plumbing or electrical installations.

What does homebuyer protection insurance cover?

Homebuyer protection insurance is designed to cover the cost of repairing hidden defects in a house, provided that the specific conditions that define "damage" are present. Although it may get a bit technical, the original definition of a "defect," according to the Danish Parliament, included the following criteria:

• Breakage
• Leakage
• Deformation
• Deterioration
• Cracking

The destruction of the building or other physical conditions significantly reduces the value or utility of the house compared to similarly aged homes in generally good condition.

On the takeover date, a defect must be present. Some typical faults in homebuyer protection policies include roof defects, subsidence damage, and illegal electrical and plumbing installations.

What is not covered by the insurance?

Coverage exceptions include those mentioned in the surveyor's and electrical installation reports, damage from age, wear and tear, poor maintenance, and planned renovations.

What is a hidden defect?

As a buyer, please note that any errors or defects not mentioned in the condition and electrical installation reports are considered hidden. It means that you should have a comprehensive understanding of the house's condition and defects. For hidden defects, it is advisable to have an indemnity insurance policy, as it covers such defects. If you do not have homebuyer protection insurance, you will be responsible for all expenses related to correcting the hidden defects.

How long does a homebuyer protection policy last?

You can choose between a five-year or ten-year insurance cover. If you opt for a five-year policy, you can extend it for another five years, but you must do so at least five days before the expiry date. Remember that buying a ten-year cover is usually more cost-effective than extending a five-year policy.

Does the insurance cover all faults and defects not named in the reports?

A popular online myth among some organisations and companies is that homebuyer protection insurance covers all hidden defects. However, this is not true. The policy covers hidden defects only if they cause damage, or if there is a high risk they will cause damage that significantly reduces the value or functionality of the building compared to similar housing of the same condition and age.

What are the differences between homebuyer protection insurance products in the market?

Most insurance providers offer identical standard cover for homebuyer protection insurance, as mandated by the government. This cover remains the same, whether you choose a five- or ten-year term. However, some companies provide additional insurance cover to complement their homebuyer protection insurance.

What does homebuyer protection insurance cost?

Insurance premiums can vary by company, so it's wise to get several quotes. Compare the prices and clauses of each company's policy before deciding.

Regarding who pays for the insurance, the seller is responsible for 50% of the insurance quote price provided by the estate agent under the purchase agreement. However, you can obtain additional quotes and select a different insurance provider as a buyer. If you choose a more expensive homebuyer protection insurance policy, the seller must cover only half of the insurance quote you choose.

IDA Forsikring doesn't offer insurance for a change of ownership. If you need homebuyer protection insurance, contact our partner, Gjensidige Forsikring, using the provided contact form.

Should I take out building and homebuyer protection insurance with the same insurer?

You don't have to use the same provider.

Does homebuyer protection insurance benefit both the seller and the buyer?

Insurance benefits both buyers and sellers in a property transaction.

As a seller, you can be released from the 10-year seller's responsibility by submitting a condition report, electrical report, and a binding offer for an Indemnity Insurance policy. Please offer to pay half of the insurance cost, and present the proposal to the buyer before the sales agreement is signed.

As a buyer, you will be protected against unforeseen expenses, such as damage not indicated in the condition report. You can take out homebuyer protection insurance for 5 or 10 years. While it may not be mandatory, we highly recommend this insurance to help you avoid risks.

If you do not get homebuyer protection insurance, you will be responsible for any repair costs that may arise after the purchase of the property. Therefore, getting this insurance can protect you from any unpleasant financial surprises.