Home Insurance
Introduction
There has been growing concern in the real estate industry about the escalating cost and availability of property insurance. Some properties involved in insurance coverage issues have real or perceived environmental problems, such as oil tanks or mould. Other insurance issues develop because of outdated wiring or heritage status.
Issues
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. What's at stake for you is not just your ability to get insurance coverage, but mortgage financing as well. 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 the dwelling
- knob and tube wiring — demands to replace
- gas furnaces more than 20 years old
- oil tanks — companies now balk at insuring homes with older fuel tanks
- mould — damage due to mould may be excluded
- wood burning appliances — WETT certification is being measured against current building codes
- older or heritage homes have a number of issues
- 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.
Source: CREA