For many people, purchasing their first home can be both an exciting and stressful time. We thought it may be helpful to outline some of the steps involved in setting up Homeowner’s Insurance for first-time home buyers.
The first step in purchasing a new home is to speak with an experienced Mortgage Broker to find out what amount of financing you qualify for. Once you have been pre-qualified for financing and you know the amount, it’s time to go house shopping, and a great realtor is always recommended. After the purchase has been finalized and you have selected a lawyer to handle the legal paperwork, it is time to call your friendly neighbourhood insurance broker!
We recommend that you contact us at least a week or two prior to possession (or longer, if you have your property information available). There are some factors which may require additional time to quote, such as the type of property (ie. if the property is vacant or under renovations), the condition of the property (ie. lack of updates or certain types of plumbing or wiring), and the occupancy of the property (room and board type arrangements).
When quoting your Homeowner’s Insurance, there will be a few details required that will allow us to obtain the most competitive rate and coverage, including:
- The name, date of birth, and occupation of all individuals on Title
- Address of the property to be insured
- Details of the location (including year built, square footage, siding and roofing type, number of bathrooms, size of garage (1, 2, 3 car), type of basement and if developed, information on any outbuildings, number of families residing in home, information on any updates done (wiring, heating, plumbing and roofing))
- If there is a mortgage
- If the residents are smokers or non-smokers
- Details of any prior insurance (credit is provided for prior Tenant’s or Condo Insurance policies) and claims history
- If there will be an alarm on the property (discounts are provided)
- If there are any home based business operations or business tools that require coverage
- If there are any co-occupants that require coverage
- What coverage and deductibles are required
We will also confirm with you what type of coverage is required on the property, and review the different options and endorsements available to you. Mortgage companies normally state that they require “fire insurance” coverage, which is included in the most common type of policy, a Comprehensive Homeowner’s Package. All Homeowner’s insurance policies have special limits that apply to certain items, such as jewellery, bicycles, fine arts, coin and stamp collections, etc. These particular items can be scheduled separately onto a policy based on their actual or appraised value and no deductible or a reduced deductible would apply. The standard deductible (the amount you are responsible for in the event of a claim) for a Homeowner’s policy is $1,000, however, it can be reduced to $500 for an additional premium and in some cases increased for a discount rate.
If you are happy with the quote and terms provided and you wish to proceed, in most cases the insurance policy can be set up effective immediately. An application form and supplemental documents are required to be reviewed and signed prior to binding coverage, and as your Broker we can review the application with you over the phone or in person, with a faxed or emailed signature being sufficient. If there is more than one person on Title, each individual will be required to sign the application. Some of the additional information required during the application process includes the mortgage information (name and address of the lender) and supplemental forms such as a privacy form, pre-authorized chequing form (and VOID cheque for monthly payments) or credit card authorization form.
Once the application is signed, we as your Broker can provide you with a Covernote of Insurance to provide to your lawyer. The Covernote of Insurance confirms the effective date of insurance, the Insurance Company coverage has been placed with, the names on title, the location insured, and the amount of coverage. The signed application and supplemental documents will be submitted to the Insurance Company for processing, and your policy documents will arrive via mail within 2-3 weeks. As policy wordings vary with each Insurer, it is important to read through your new policy to ensure that you understand any exclusions or limitations in coverage. As always, if you have any questions regarding your new Homeowner’s insurance policy, we would be more than happy to assist you!
Thank you,
The Costen & Associates Team
