When should a buyer arrange home insurance for their 'new' home?
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 sufficient time to arrange insurance elsewhere, thereby jeopardizing the closing of the transaction.
If a buyer (or their agent) suspects that a particular house may not be insurable, they should seriously consider not buying that particular property. Any mortgage company will insist that the building be thoroughly insured for the replacement cost of the structure, which is not necessarily the actual purchase price.
The Ontario Real Estate Association (OREA) recommends that buyers ask their agent to ensure that offers include a condition permitting the buyer to arrange satisfactory property insurance. This is particularly applicable for older homes, those in a poor state of repair, not owner-occupied (rented), rural properties some distance from fire departments or hydrants, have been used for illegal purposes (grow-ops), suspected of having defective surface or buried oil tanks or some other feature commonly of concern to insurance companies. Items such as 60 amp service, aluminum or knob-and-tube wiring, asbestos insulation, old furnaces, Kitec plumbing or worn roof shingles are all typical red flags for insurance companies.
What if a buyer is unable to arrange insurance in the ...
There are substandard and specialty markets available for challenging properties or for buyers considered poor insurance risk. However, they normally don't deal directly with the public. An insurance agent can help, but premiums are usually higher and coverage lower.
Have you wondered how you could possibly ...
If a customer maintains multiple policies, such as home and auto, with the same company, many insurance companies offer volume discounts. Higher deductibles can also somewhat lower premiums. Centrally monitored security and fire alarm systems, claims free years and seniors discounts may also apply.
If you would like to learn more about home insurance, click the appropriate logo to visit The Insurance Bureau of Canada website or call their consumer information center at 1-800-387-2880. Or visit
The Insurance Brokers Association of Ontario
for more assistance.
For other provinces and countries, I'm sure similar information is readily available on-line.
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