Home Insurance
When to Arrange a Policy

When should a buyer arrange home insurance for their 'new' home?

A policy should be arranged ...

Immediately After Acceptance of the Offer.

Waiting until just before closing of the sale could be problematic. Such short notice may not permit sufficient time for the insurance company to review and process a house insurance policy application. Also, if the insurance company declines the application, the buyer may not have time to arrange insurance elsewhere, thereby jeopardizing the closing of the transaction. Big problem!

If a buyer suspects that a home may not be insurable, they should seriously consider not buying the property. Any mortgage company will insist that the building be properly insured for the replacement cost of the structure (not the purchase price). So ...

No Insurance - No Mortgage - No Purchase

The Ontario Real Estate Association (OREA) recommends that buyers ask their REALTOR® to ensure that offers include a condition upon the buyer being able to arrange a satisfactory insurance policy on the property. This is particularly applicable for older homes, those in a poor state of repair, are not owner occupied (rented), are rural properties some distance from fire departments or hydrants, have been used for illegal purposes (grow ops), or are suspected of having defective above-grade or buried oil tanks, or some other feature of concern to insurance companies. Items such as 60 amp service, aluminum or knob-and-tube wiring, asbestos, old furnaces or roof shingles are all red flags for insurance companies.

What if a buyer is unable to arrange insurance in ...

The Regular Insurance Market?

There are substandard and specialty markets available for challenging properties, or buyers considered poor risk by insurance companies. However, they do not deal directly with the public. An insurance agent may be able to arrange this type of insurance, but premiums are usually higher and coverage may be lower.

How may a buyer ...

Reduce Home Insurance Premiums?

Many insurance companies offer volume discounts if a customer maintains both home and auto insurance with the same company. Higher deductibles will also often lower premiums. Centrally monitored security and fire alarm systems, claims free years and seniors discounts may also apply.

OREA has developed a consumer brochure entitled Home Insurance – What Consumers Need to Know. Go to Member Services and click on Consumer Brochures. Print versions can be ordered directly from OREA.

Need More Information?

The Insurance Bureau of Canada operates a consumer information center at 1-800-387-2880 and a website here IBC.

Or you may visit The Insurance Brokers Association of Ontario for more assistance.

For a great explanation of house insurance, check out a publication entitled Home Insurance Explained published by The Insurance Bureau of Canada.

For other provinces and countries, I'm sure similar information is readily available on-line.

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