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