The Insurance clause is one of the standard subject clauses in a contract of purchase and sale. Essentially it’s there to make sure that both you and the lender of your mortgage are protected in case of fire. Below is a further explanation of why we include it.

Qualifying for home insurance isn’t something most Buyers have trouble with but . The exception being when something is really old, has unusual things like knob and tube wiring or aluminum wiring. Not fire insurance challenges often include ancient iron plumbing and old oil tanks for example. All can be remedied but the way I usually see it play out is that the company will want the Buyer to have whatever issue professionally remedied before offering insurance on that particular thing or they will agree to certain parameters for you getting it remedied, period.

It’s quite rare for a deal to fall apart on the insurance clause, but it’s one of the details that has many details within it. It’s good to have an idea of the roadmap ahead to prevent last minute stress.

For more on the process of buying and subjects clauses have a look at this post.

Ryan Coffey

Property/Fire Insurance and You

Whether you are buying your first home, or have been through the process before, and are now searching for a second home, or trading up or down because of a change in the your life such as the birth of a child or older children leaving home, one thing you must find before you get the keys to your new house is fire and/or property insurance.

In British Columbia, insurance clauses are actually written into purchase contracts, with language that reads, “This offer is subject to the Buyer obtaining approval for fire/property insurance, satisfactory to the Buyer, by (DATE). This condition is for the sole benefit of the Buyer.” Even if it isn’t included in the contract as a requirement of sale, however, there are many reasons to make obtaining insurance a top priority. Here are several:

• Your lender requires it:  In order for a mortgage to be finalized, you must prove that you have adequate coverage on your home.
• You will be protected from financial loss: Your property insurance will pay you for any personal effects that are stolen from your home, or will replace appliances covered under the policy, as well as fund the restoration of your home and garage should a fire or other disaster damage the structure. In the event that your home becomes unlivable, your home insurance will cover accommodations and some of your living expenses while repairs are underway.
• You will have liability coverage: If a guest to your home is injured, your property insurance will cover court costs and any settlement that is ordered. In addition, your insurance gives you financial protection against accidental damage to another’s property, for example if you live in a condominium and your toilet or bathtub overflows and causes damage to a neighbour’s home.

It should be fairly obvious, then, that property/fire insurance is something every homeowner needs, but what if you live in a rental home? And what if you live in a condo?

Condo Insurance

While it is usual for each condo corporation or complex to carry insurance, you will still need property insurance of your own, because the corporation’s policy only covers the basic structure of the building. In order to have coverage for any upgrades, carpeting, or wood flooring that you’ve installed, or to have coverage in case of damage to or theft of your personal belongings, or liability in case of injury to a guest in your home, your own policy is required. Special condo owners policies are available.

Renter’s Insurance

Also referred to as tenant insurance, this is similar to a condo policy, but designed for renters. Again, it doesn’t cover the structure of your home, only the interior, including upgrades, personal possessions, and liability in the case of injuries to visitors.

When shopping for your new insurance policy, whether you are insuring a single family home, a condominium, or an apartment, one thin to bear in mind is that policies differ from insurer to insurer. Make sure you compare coverage amounts as well as the cost of the insurance, in order to get an accurate quote.