Types of Insurance involved in Real Estate
Having the right type of insurance is imperative when you are purchasing a house or a condo. I wrote a blog post about this in April after a webinar with Elyshia Cheung from CRS Merrill Insurance – you can read some tips about home insurance coverage you may not have thought about!
There are other types of insurance you need to know about as well!
Mortgage Insurance – if you are putting less than 20% down on your home, the mortgage will need to be insured by either Canada Mortgage and Housing Corp., Sagen (formerly Genworth) or Canada Guaranty. It is a one time fee that is added to the mortgage, and will stay with the mortgage until it is paid out in full. The fee is a set percentage rate of the mortgage amount and is determined by the down payment. Ask your mortgage broker for details!
Title Insurance – this is generally organized by your lawyer at closing, and lenders may require that a Lender Policy be ordered and in place prior to funding the mortgage. There are two types of Title Insurance: Owner's Policy and Lender’s Policy. Owner’s Policy insures the property owner against loss to the owner for as long as they own the property; Lender’s Policy insures the mortgage holder that the mortgage is a valid and an enforceable charge against the property. (Source: Sharlene Scott, Mortgage Advisor).
Life/Disability Insurance – this is for your mortgage, and you will be asked about this by your mortgage broker. It is to cover you in the event of disability, critical illness, or loss of life. You can also discuss options with a financial adviser, as there are alternatives to mortgage insurance coverage.
House/Condo Insurance – you need insurance on your new home! It will cover damages in and outside your home, your stuff inside your home, personal liability (slip and fall), fire, hail, and can cover expenses during and after an emergency. If you are buying a condo, the condo corporation will have insurance in place for the exterior of the property (you will get a copy of the certificate of insurance with your condo documents). You need to have contents insurance and liability insurance that will cover the items you are responsible for (the interior of your unit). It is important you speak with an insurance broker about your options for insurance – there are riders that can be added to the policy to cover your specific needs.