Insurance issues

There has been growing concern in the real estate industry about the escalating cost and availability of property insurance. Insurance companies have refused to insure homes that have been previously covered. In other cases, companies have decided to raise insurance premiums by a considerable amount. Provincial governments are responsible for regulation of the insurance industry, including the cost of premiums and the availability of products. The federal government’s responsibility is limited to ensuring that insurance companies are financially sound. If you’re buying a home these days, you have to think about insurance. It could affect whether or not you get the home you want.

Home insurance companies have tightened their underwriting criteria and they’re reluctant to take on risks that may not have bothered them in the past. Banks won’t approve a home loan unless there is proof of insurance.

A number of home insurance issues have been identified that can impact the transaction process. These issues can include:

         Aluminum wiring – demands to retrofit and/or change completely to copper

         60 amp electrical service – not deemed to be sufficient regardless of the size of dwelling

         Knob and tube wiring

         Gas furnaces more than 20 years old

         Oil tanks

         Wood burning appliances – WETT certification is being measured against current building codes

         First time buyers without prior home insurance history

         Insurability point system now used by insurers which may be detrimental to first time buyers. This includes “red zoning” because of the location of the property

 

This information is by

CREA

The Canadian Real Estate Association

Info@crea.ca