There are different types of insurance packages available to homeowners depending on your specific situation and needs. It can be tricky to understand exactly what is covered, and what is not.
At Hallmark Attorneys LLP, we will review your insurance agreements to make sure your interests are protected. Based in Richmond Hill, our goal is to make sure you understand what protections you are paying for.
Homeowner’s Insurance
You must purchase insurance that is appropriate for the property you are purchasing. If you are buying a freehold property it will be referred to as homeowner’s insurance. It will protect you from losses resulting from certain damages to your home, theft of contents, or liability if someone is injured. If you have jewellery, collections, or hobby equipment you may require additional coverage to fully protect the value of these possessions.
If you are going to rent out your home you will need special insurance for properties with tenants. Insurance policies are very complex and should be reviewed in detail with your insurance broker. You will get the best rate if you insure your home and vehicles with the same company. In the case of a freehold property, if you have a mortgage or secured line of credit the lender must be named in the insurance policy. Your lawyer will require proof of homeowner’s insurance when a mortgage is to be registered on your property.
Condominium Owner’s Insurance
If you are purchasing a condominium you will also require condominium owner’s insurance. Even though the structure is insured by the condominium corporation, the interior of your unit will require your own insurance. In addition, it will protect your contents and provide you with liability coverage.
Mortgage Insurance & Disability Insurance
These insurance packages are generally offered by most major banks. The purpose of this type of insurance is to pay off your mortgage in the event of the death of an insured party or to make payments in the event an insured party is disabled and unable to work. If you are considering this type of insurance it is best to shop around as you may find a life insurance company that offers a better premium or you may decide term insurance offers adequate protection.
With bank-issued mortgage insurance, it is only the insured mortgage that would be paid off by the insurance proceeds. If, in the future, you became uninsurable you would not be able to change your mortgage company and retain the protection of your mortgage insurance.
CMHC Insurance
This insurance is mandatory if the mortgage you are arranging is for more than 80% of your purchase price. When you purchase this insurance, you receive no protection. It is designed only to protect your bank.
If you are unable to make your mortgage payments and the bank takes your property away from you and sells it at a loss, the insurance company will pay the difference and then pursue you to collect the sum it paid to the bank.
You must have a down payment of at least 5% of your purchase price to obtain this insurance. The amount of the premium and sales tax will be added to your mortgage debt and you will be charged interest on that sum until the mortgage is paid off.
For More Information, Contact Hallmark Attorneys LLP
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