Types of insurance
by Dave
Hello, First Time Home Buyer and InsuranceHi Dave Sorry for the delay in answering. When you are buying your first home there are several insurance offers that will come your way. These include fire insurance (home owners), title insurance, as well as mortgage insurance (ie if you default on your mortgage) and the other "mortgage insurance" which is a type of life insurance. We'll give you a quick overview of each so you are better prepared when reviewing offers from your insurance providers. Fire insurance is commonly requested by your lender. Even if you do not have a mortgage it is a good idea to protect your investment from fire. Today's fire insurance policies are usually much more comprehensive than just covering fire and are referred to as homeowners insurance. Read more about home insurance at: Home Owner Insurance Policy and at Home Owners Insurance You can get quotes on your home owners insurance here: Title insurance is in case you buy your home and it turns out that the title is not legally yours. This can be provided by your lawyer's office. Talk with them about whether this is right for you. The first type of mortgage insurance mentioned is in case you have less than 25% down payment. Then it is required that the mortgage be insured through CMHC (Canada Mortgage and Housing Corporation). The other type of mortgage insurance is what your lender will offer in case of death and possibly critical illness (Mortgage Life Insurance. For a number of reasons, it is generally better to buy a life insurance policy from a life insurance company instead of what the lender offers. There are many advantages to doing this. Generally the price is better, coverage does not decrease over time, you can pick your beneficiary, and there are less exclusions when you buy through a life insurance company instead of the lender. Again, you can get quotes at: Get a quote at: Once you have quotes you should have an opportunity to ask questions about the coverage. If not, check with an insurance broker for professional advice and a full explanation tailored to you. To answer your question about which are required: The CMHC insurance is required if you have less than 25% down Life insurance might be required by some lenders in order to get a loan (you can buy it privately - which is good to consider) Home (fire) Insurance is required by all lenders if you want to have a mortgage Title insurance is not mandatory at all. But talk with your lawyer. Hopefully this quick overview helps a clarify a bit. Ask another question at House Insurance Questions and Answers Note: Keep in mind that insurance licensing, legislation, and policies often vary by province and most certainly by country. Canada Insurance Source is a free information source. So use this site to gain a general understanding of insurance with your own area and situation in mind. This insurance information is general in nature and the policy wordings always take precedence. Make sure you review the "please read" page. OR visit Canada Home Insurance |