Understanding your insurance coverage when buying a home

Understand your insurance coverage when buying a home; what`s at stake is not just the insurance, but mortgage financing as well. Banks won`t approve a home loan unless there is proof of insurance.

A number of home insurance issues have been identified that can impact the transaction process. These issues can include:

  • Aluminum wiring - retrofit and/or changes to the wiring may be required.
  • 60 amp electrical service - not deemed sufficient regardless of the size of the dwelling
  • knob and tube wiring-used in old homes
  • gas furnaces more than 20 years old
  • Oil Tank -Tanks must be replaced - The inspector will check the age of the tank
  • Wood burning appliances - WETT certification is being measured against current building codes
  • first time home buyers without prior home insurance history
  • insurability point system now used by insurers which may be detrimental to first time buyers. This includes ``red zoning`` because of the location of the property.

When preparing an Agreement of Purchase & Sale it is important to include a condition of the buyer obtaining insurance for the property.

Source: The Canadian Real Estate Association

 

 

Bernard Haché

Bernard Haché

Real Estate Broker
CENTURY 21 Action Power Team Ltd., Brokerage*
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