Step 20 to Buying a Home: Shop for Home (Fire) Insurance

A few weeks before your closing, your lawyer and mortgage lender will request for a home insurance or fire insurance. If you will be buying your home with a mortgage, this step is mandatory. They will not fund your purchase without this insurance. To save on the premium, get this where you currently have your car insurance so you’ll enjoy 5% savings by bundling in.

How much does it costs depends on whether you have a condo unit (where your condo board pays for the building insurance) or a freehold home where you have to ensure the full house. Make sure you mention this when you’re getting insurance quotes. You will need information about your house (age, plumbing, age of roof, age of HVAC, type of heating, etc) when you get the quote. Your inspection report and your Realtor are a great source of information with regards to this matter. The cost of insurance premium for a home (fire) insurance ranges from $30 – $100 so make sure to shop around.

The mortgage lender would like to see that the mortgagee information is correct – this is provided by the mortgage lender. This means, if you haven’t fully paid your home yet, the proceeds of the house will go towards paying them first. Reality is, when your house burn down, the insurer will try their best to mitigate the situation by hiring the best people for the work, to repair the damages as quickly as possible. During this time, you will be sent to a lodging facility they use, a hotel or an airBNB, depending on the one you purchase so don’t choose the ones that provide lowest quote – check the features in case you need to claim since it is not too expensive anyway. You will continue to pay your insurance premium and mortgage during this time.

For most people, your home is the biggest purchase you will ever make and you want to make sure it’s properly insured.

Why It’s Important: Make sure your homeowner’s insurance policy starts the day you close on your new home. This way, if something unexpected happens (like a fire) while you’re at the closing, you’ll be covered.

Steps to Take:

1. Start Your Policy Early:

   • Have your insurance policy begin the day of your closing date.

2. Get Documentation:

   • Your mortgage lender will need proof of insurance before they can finalize your loan. Make sure to get the necessary documents from your insurance company.

3. Provide Proof to Your Lawyer:

   • Give the insurance documentation to your lawyer so they can send this info to your mortgage lender before closing. They need to see that you have insurance in place before they fund your loan.

Why It Matters: Having your insurance start early and providing proof to your lender ensures everything goes smoothly and you’re protected from the start. Make sure that your coverage is enough and you have good replacement cost.

If you have any questions or need help with this process, feel free to ask!