I am purchasing a property. I keep hearing about different types of insurance. What insurance do I need?
If you are purchasing a house and putting a mortgage on the property, your mortgage lender will require that fire insurance is in place. Even if you are not placing a mortgage in connection with your purchase, you should ensure that you have obtained fire and liability insurance.
If you are purchasing a standard condominium, the condominium corporation is required to maintain insurance to enable the corporation to repair the building in the event of a fire loss.
Note that the condominium corporation’s insurance only covers restoring the “standard condominium unit”. You need to make sure that you buy your own insurance in order to cover replacement costs of any improvements or upgrades you have made to your unit. You also need to insure your contents and to obtain liability insurance with respect to the unit.
The deductible on a condominium corporation insurance policy can be significant. You should consult with your insurer to make sure that you have coverage in the event you are called upon to reimburse the condominium corporation’s deductible.
One other type of insurance is title insurance. Title insurance covers you and your lender against various title issues. Title insurance is a “one time” fee which you pay at the time you purchase your property.
Title insurance is a useful tool as it can provide various benefits including: reducing some of the costs associated with a purchase closing; providing some protection against fraud and; in some instances, resolving problems that crop up when you eventually sell your property and assisting you in passing title to the new purchaser.
When considering purchasing a property, you should discuss the various types of insurance with your lawyer in order to make sure that you have placed the appropriate insurance in connection with your particular type of transaction.