29 Jul Home Insurance: Steps You Should Take When Making an Offer

Home Insurance: Steps You Should Take When Making an Offer

There are many details to consider when purchasing a home and oftentimes, one of the last items people look into is home insurance for the property. However, it is important to understand what will and will not be covered by insurance when you make an offer to purchase a home, that way you can ask the insurer questions and include specific clauses in your Agreement of Purchase and Sale.

When you suffer damage to (or the loss of) your home or its contents, you expect your insurance company to come to the rescue, and most do.
Still, it’s a good idea to review your policy with your insurance advisor and find out what’s covered and what isn’t. For example, if you have a flood in your laundry room, you don’t want to discover then that the damage is not covered.

Some events and items that often require additional coverage, or may not be covered at all are:

• Overland water (interior home damage from water outside the home)
• Sewer backup
• Poor maintenance (e.g., you could be denied if you didn’t maintain your foundation or repair a leaky pipe)
• Valuables beyond a specific amount
• Plumbing that isn’t insurable – if the home has Kitec plumbing and fails due to a defect in the plumbing system, the company may deny your home insurance claim. Most plans exclude coverage for damage caused by faulty workmanship or defective materials. Some insurance companies have specifically excluded coverage for Kitec plumbing, while others may limit coverage for this type of plumbing.
• Most insurance companies today require that you obtain an inspection of your wood burning appliance by a WETT  (Wood Energy Technology Transfer) Certified Inspector.  WETT is the governing body who work with insurance underwriters and government bodies, to ensure safe installations and provide standards for inspections and insurability of wood burning appliances, such as wood stoves and open fireplaces.
• Older aluminum wiring – If your home was built between the mid-1960s and late 1970s, you may have aluminum wiring. Some insurers will not provide or renew insurance coverage on homes without an Electrical Safety Association (ESA) inspection. You may need to repair or replace the wiring and provide your insurer with a copy of the ESA Certificate of Acceptance. Ask your insurance company for their requirements.
• Asbestos – Asbestos may be found in some older homes, ie. in insulation, in vermiculite insulation, ceiling and floor tiles, and other places. Having a condition for a building inspection and/or testing material in an offer is a good idea. You will also want to ask your insurance company what they will insure.

As you can see, having this information is important and gives you the opportunity to include specific clauses in your Agreement of Purchase and Sale, i.e. conditon on getting satisfactory insurance on the property, condition to complete a WETT inspection, condition to complete a building inspection, etc.

Also, check liability limits. Ask your advisor to recommend an appropriate level. Finally, ensure you know exactly how much your home is insured for. Are you covered for the full replacement cost? Are you comfortable with that coverage, or would you rather only insure for the actual cash value?

Knowing you have the right insurance policy will give you peace of mind and is an important part of enjoying your home.

We are up-to-date on the current market, the processes and procedures and would be happy to help you find your home. If you have any questions about the greater Ottawa neighborhoods and the Ottawa real estate market, feel free to contact us!