August 30th 2021
When To Get Home Insurance
By Arthur Favier
With the Canadian housing market booming, it is an exciting time to buy a new home. Hundreds of Canadians take that step every day. There have already been over 500,000 homes sold in 2021. Attending open houses and walking through what could be your future home is all incredibly exciting, but home buying can be a bit overwhelming as well. Home inspections, price negotiations, and mortgage terms can put your head in a spin when looking for a property.
One aspect of buying a home is more overlooked than the rest, and it shouldn't be because it's one of the most important things to consider: home insurance. Getting home insurance is a critical part of purchasing a home, but how do you know it's the right time to set up a home insurance policy? This article will help you ease the stress of buying a home and finding home insurance by teaching you how to know when is the right time to get home insurance.
Why Get Home Insurance?
The first step to figuring out when to get home insurance is considering why you should get it in the first place. Home insurance is a valuable asset in owning property. Buying a home insurance policy keeps your new house secure from all types of dangers that might arise. This security is invaluable to a new homeowner as accidents can occur at any moment and can cause severe, lasting damage to your house.
By having home insurance, you can keep your finances safe by using the insurance coverage to cover any accidental damage that might occur, and fixing up a burst water pipe is not cheap. Having home insurance doesn’t just benefit you; it can help your lender as well. When a lender invests their money with you buying a house, they want to be sure that investment is safe for them. Lenders will sometimes even require home insurance as protecting their assets is just as important to them as you.
Paying for your home insurance can be made simple with an escrow account. Your lender creates an escrow account, and it retains funds for property expenses. Your monthly mortgage payments are deposited into your escrow account by your lender. This allows your lender to pay for your insurance costs and the property taxes by using the money initially deposited in the account. By paying your premium for you, your lender protects themselves by ensuring that the home is covered at all times. However, the escrow account is not just for your lender as it saves you as well. Easing the stress of an accident or disaster occurring simplifies your monthly payments because the lender makes the actual payment on time. You can take that off your plate and worry about all your other payments that month.
Another reason to consider home insurance is that some coverage includes a vast amount of expenses for your home. For example, under some policies, you can cover house repairs and personal belongings in your home. If there is a theft or someone breaks into your home, you can know that all the belongings in your house will be covered by the insurance, including the window or broken lock the thief shattered to get in.
With all of these significant advantages to having a home insurance policy, it's no wonder why the majority of Canadians chose to get one. However, there can be a few downsides to consider as well. Mainly, how much your lender covers can be a bit murky, and it might not be the full cost. Also, each lender could have a different insurance policy that covers specific aspects of your home. This can be tricky as you might want coverage of all kinds, but your lender only offers theft and fire or water damage. If you have questions about who and what is covered by your policy, feel free to speak with one of Properly's agents, who can help outline the specifics of your policy.
When is the Right Time?
Typically, you purchase a home insurance policy before closing on the property. Having insurance before you officially own the home is vital because it protects you from any unforeseen disaster the very second you own the house, so there is no overlap in not being covered and potential disaster striking. Start looking for a home insurance policy with your lender as they might be financing part of it, so they must approve of the coverage you want as well. This is why having a friendly lender you trust can be an important aspect of buying home insurance. You want them to be looking out for both party's needs.
Another consideration when buying home insurance is getting all of your documents and quotes in order. As you will be looking at many types of home insurance policies, it is best to collect several quotes and compare them. By doing this, you will have more options for better rates. It can be confusing and challenging to organize all the necessary information, so be sure to ask your lender if you need help.
Once you have all your information organized and have found the best quote for you, it is time to purchase the insurance! It would be best to do this sometime before you officially own the house. Insurance companies tend to pre-approve the insurance policy and then officially activate it when your escrow requests proof of insurance at the final home closing date. The insurance company might send you a file in which you can print out the physical copy of your policy and get the papers in your hands before you even pack a box.
Now that you know when to buy home insurance, it is crucial to find the right one for you. Properly takes a look at the most frequently asked questions first-time home insurance buyers have and answers them here.