Homebuyers Insurance – Why is this important?
One of the lender requirements at the time of closing is that you have appropriate home insurance in place. They are lending hundreds of thousands of dollars based on the home you are buying so they want to make sure that if anything happens the home will be repaired or rebuilt.
Not all homes are considered insurable. Some may be considered high-risk due to area. As an example, some homes are built on flood plains so most companies will not cover them.
In our area forest fires are a huge concern. Buying a home and home insurance while there are active fires nearby can be very challenging, if not impossible.
When your realtor confirms that you have an accepted offer they will advise you to go purchase home insurance. This seems pretty straightforward.
So where do you start?
When you go to the insurance company, they will ask you questions about the construction of the home you are buying. Take the one-page MLS listing with you. A great deal of the information that the insurers need will be included on that sheet.
As well, they will ask about (not an all-inclusive list):
- The age of the roof, and what type of roof it is (ie: shingles, tar and gravel, etc)
- The age of the hot water tank
- Protection details – nearest fire department
- Is there a security system?
- The type of electrical, plumbing, and heat sources in the home
- The intended occupancy of the house (your primary residence, a rental, is there a rental suite in the home?)
- Will you be conducting any type of business in the home?
- If you are buying a strata property, you will need to know what the strata’s insurance deductible is
For an easy reference here are 2 great downloadable handouts:
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