1. CONTENTS AND LIABILITY INSURANCE/ FIRE INSURANCE
Non- Condo Purchase
It is the responsibility of the purchaser to get the house insured under terms stating the full guaranteed replacement value for the property and its contents before the closing of the deal. The insurance should be effective beginning from the day of the closing. The mortgage lender must be the one responsible for paying up the losses. The residential non-condo purchase deal cannot be closed by our office if we do not receive an insurance confirmation from the relevant insurance company (by fax). So, kindly confirm from your insurance agent to forward the binder letter of the insurance to our law office. This letter must contain all the information such as the arranged coverage, replacement costs and the complete address of the purchaser and the mortgage company.
Although, it is the responsibility of the condo management corporation to maintain an insurance policy for the entire condo project, you too should ensure you have the insurance for the contents of the condo. This should begin from the date of the closing. In case you are buying a new condo, it should be effective from the date of occupancy. Also, ensure that you are getting a condominium unit owner’s policy instead of the tenant’s policy.
Note: The typical insurance provided by the condo management covers all the items as initially provided by the condo corporation. So, any changes made thereafter might not be covered in the insurance policy. Also, make sure that your condo unit insurance is responsible for paying all the deductibles that the unit owner owns as per the condo company’s insurance policy.
If you are the Seller
Never cancel the insurance of your property until the transaction has taken place and the deal is closed. Your current policy must not expire on the expected date of closing. In such a case any delay in the closing will lead to a situation where you are the owner but you do not have the required fire insurance.
Note: If the property has been vacant for more than 30 days, your insurance agent must enclose a special insurance binder for successful closing.
2. Life Insurance to Cover Mortgage
It is vital that the primary breadwinner of the family is insured adequately. This is because the mortgage payments can be paid from the insurance in the unfortunate event of his/her death. Avoid getting insurance from the same mortgage lender from whom your house mortgage is running. This can lead to a situation where insurance is terminated when the buyer gets alternative insurance from some other company. So, getting such insurance from the same mortgage company is not a wise decision. Also, there are some other reasons including:
- Mortgage lenders usually offer life insurance at a higher cost compared to other insurance providers.
- In case you decide to switch the mortgage lender, you have to qualify for the insurance again through a complex and lengthy process.
- In case you have to get a new insurance from the same mortgage lender after the closing, you will most likely pay higher insurance costs due to increased age, inflation and considering that you have switched the mortgage lender by selling the property.
3. Title Insurance
Title insurance provides coverage against any issues that may arise due to a faulty condition on the ownership or title of the property. For more details please click the link below: