Buying your first home is an exciting time, but it’s also a very busy time. Along with getting that first home, come a lot of first time experiences, getting a mortgage, setting up utility services, completing a title transfer with a lawyer, and obtaining insurance to protect the newly purchased home.
Often times, insurance is the last thing a new home buyer thinks of, let’s face it, insurance isn’t the most fun purchase people make, it’s really just a piece of paper representing a promise until it’s needed – and no one really wants to “use it”.
Your bank almost always requires that you have “fire insurance” (aka house insurance) in place before they will release the mortgaged funds needed to buy your home. The bank has this requirement to protect their investment in your property, and will ask to be listed as “first loss payable”, meaning that in the event of a fire, the banks interest (amount of the mortgage) is paid out first, with the balance of the policy paying out to you, the homeowner.
Often times first time home buyers only find out that home insurance needs to be in place when they go to sign all the title papers with their lawyer. By this time, there is often only a few days left until possession, leaving little time to learn about options, pick a policy, get the chosen policy activated, and obtain an insurance confirmation to show to the lawyer.
Generally speaking you should be able to go see an insurance broker and leave with a new home insurance policy in 20 – 30 min. However, there are some things that could throw a wrench in your plans to get insurance taken care of quickly. If your home is heated by a means other than a natural gas forced air furnace you may have to have an insurance representative inspect the heat source prior to getting insurance in place. If the home or detached outbuildings are equipped with a wood stove it may also mean an inspection is required. Older homes, that have older style wiring, such as knob & tube, aluminum, or lower amp breakers (ie 60 amp) can also cause problems when you go to get your new home insured. It’s always best to leave yourself enough time to explore all your options with your insurance broker so you don’t have to make a rush decision based on limited options.
Your insurance broker should present you with coverage options from several insurance companies. After all that’s what a broker does, they represent you to the insurance market place and help you find an insurance company that suits you. A few things you should ask your broker about regarding the insurance companies you are considering;
- How does the company typically perform in a claim situation, are they quick to respond, fair, reasonable with claim settlements?
- What kind of payment options are available? Can I make monthly payments, pay by credit card, are quarterly instalments an option?
- Does the policy provide replacement cost coverage (repair or replacement with new material), or is it actual cash value coverage (settlement based on depreciated value).
- What deductible options are available (500, 750, 1000 etc) – often it’s worth it to move that deductible up and save some premium dollars
- Ask about special limits, that is how much coverage the policy provides for bicycles, jewellery, professional property, collectibles etc.
- Is sewer back up coverage included? Is there a limit to how much can be collected on a sewer back up claim or is the coverage unlimited
As well, ask your broker about some endorsement options, often endorsements can add a lot to a policy and only cost a few dollars per month, some of the more common endorsements you should consider are
- Building by laws
- single limit
- sewer back up
- identity theft
- equipment breakdown
- guaranteed replacement cost
- firefighting expense
- special limits enhancement
- service line coverage
- third party liability increased limits
Most of these endorsements can be added to your policy for $10 – $30 per year, and some are even free – make sure you know which ones can add value to your policy.
Some of the common policy discounts that you should know about include;
Claims Free Discount (10 – 15%) – usually requires that you have a 3 year + claims free history with an insurance company, but is sometimes available to first time home buyers
Alarm System Discount (15 – 25%) – usually requires a monitored alarm system, but sometimes a discount can be allowed for a local non monitored alarm system too. Make sure you let your broker know if your alarm monitors fire as well as intrusion, there’s often an extra 5% available for that
Mortgage Free Discount (5 – 10%)
Age Discount (5 – 20%) – usually age discounts start when an occupant of the home turns 40
Multi Line Discount (5 – 10%) – sometimes available if you have your home & auto insurance with the same company
New Home Discount (1 – 30%) – available on newer homes, usually homes that are 20 years or newer can qualify for some form of discounting based on the dwelling age
We hope this helps provide some additional insight into insuring your home. This is a big moment in most people’s lives and is typically the largest purchase someone will ever make. That is why we want to be a part of your journey and make sure you are looked after and that if the worst were to happen, your home will be properly insured.