Types of Insurance
When purchasing a home there are three main types of insurance that a purchaser must carefully consider arranging:
1. Title Insurance: This refers to the protection provided to the condition of ownership of a property against multiple problems with the title that may arise. For a detailed discussion on Title Insurance check our website by clicking the link below: (LINK REQUIRED)
2. Contents and Liability Insurance:
- For a Home Purchase- The buyer is responsible for getting his property insured for a full coverage of the value of the property against damages from fire. The insurance must be effective from the day of the closing and must list as first loss payable the mortgage lender. The purchaser must request his insurance company to provide a binder letter stating the terms and conditions of the policy. This letter must be faxed or otherwise provided to our law office in order for us to proceed with the closing of the purchase.
- For a Condominium Purchase- The purchaser must obtain a condominium unit owner’s policy (not a tenant’s policy) to insure all the contents of the condominium in case of damage by fire. Even though the condominium corporation buys insurance for the entire condominium project at the time of its registration, such insurance may not cover any changes made by the buyer. The purchaser should ensure that the policy obtained is responsible for paying all the deductibles attributed to the unit owner as per the condo company’s insurance policy. The policy should be effective from the date of closing or the date of occupancy in case of a new condominium purchase.
3. Life Insurance: The purchase of life insurance I important because in case of the death of the mortgage payer, the mortgage balance can be paid from the life insurance policy. It is recommended that you purchase life insurance from an independent agent rather than your mortgage lender because:
- The cost of life insurance is often higher if arranged through the mortgage lender.
- If you switch your mortgage lender you have to qualify for the insurance again through a complex and lengthy process.
- If you decide to buy a new insurance policy from the mortgage lender at a later date then the cost of new insurance will be higher due to inflation and increased age.
Note – If you are a SELLER you should not cancel your home insurance until the deal is closed in case the closing is delayed. You must also arrange with your insurance company for a special insurance binder in case the property has been vacant for more than 30 days.