When purchasing a home, there are many types of insurance to consider to protect your investment.

If you are financing your home purchase with a mortgage you will have to arrange for fire insurance to cover the property from the day of closing. Fire insurance coverage is at least equal to the loan amount or the building value, whichever is less. You should also consider a homeowner’s policy that combines fire insurance on the building and its contents with personal liability coverage. You provide your insurance broker with the name, address, telephone and fax numbers of both your lawyer and of the financial institution.

Once you have arranged your insurance a “binder letter” must be send to your lawyer confirming that insurance coverage is in place effective the day of closing and noting the interest of the mortgagee on the policy.

*Please note that your lawyer will be unable to close your transaction and the mortgagee will not advance the mortgage money to close unless confirmation of insurance is received by your lawyer.

Title insurance is the application of the general principles of insurance to real estate titles. Unlike other types of insurance which protect the insured against loss due to unexpected future events, title insurance protects against loss which may occur due to events that took place in the past. Title Insurance protects an owner of residential or commercial property against loss or damage suffered due to defects, fraud, forgery, liens or encumbrances, and future unmarketability of title. relating to the owner’s title. Title Insurance is purchased by your lawyer on your behalf. For the cost of a single, one-time premium, title insurance protects the property owner against loss resulting from any title defects to the property covered in the policy for as long as the property is owned.

If your mortgage is “high-ratio” (exceeding 80% of the property’s value), it must be insured through CMHC (Canada Mortgage and Housing Corporation) or GENWORTH (GENWORTH Mortgage Insurance Company of Canada). With this insurance, financial institutions can loan up to 100% of the value of the property. Mortgage Insurance protects lenders, by guaranteeing them the payment if you default on your mortgage. (but you are still responsible for the debt).

While the insurance premium can be paid up front on closing, its’s usually added to the amount borrowed. By adding it to the overall cost of the mortgage, you are paying interest on the insurance premium but you do not have to come up with the cash premium on closing.

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Mortgage life insurance is insurance coverage on your life which protects your family or beneficiaries by paying off your outstanding mortgage in the event of your death. Mortgage life insurance premiums are based on two factors: your age and mortgage amount. Your premium is added to your mortgage payment so there’s no extra paperwork, and it remains the same until your mortgage is paid off or renewed. Joint coverage of spouses is also available, speak to your financial institution.

Disability Insurance is important if your mortgage payments depend entirely or in part on your income. Disbility insurance provide replacement income if an accident or illness prevent you from working. Speak to your financial institution about this type of coverage.

This insurance covers the mortgage payments in the event that you involuntarily lose your job.