There can be a lot of confusion around the different types
of insurance when purchasing home. Here is a quick overview:
Default insurance: This is provided through CMHC, Genworth
or Canada Guaranty. It is required for purchases with less than 20% for down
payment. It is a percentage based on several variables but mainly your down
payment amount, down payment source and amortization. It is generally just
added into your mortgage at origination.
Home insurance: Otherwise known as Homeowner’s insurance. It
is a type of property insurance that combines various personal insurance protections, which can include losses
occurring to one's home, its contents, loss of its use (additional living
expenses), or loss of other personal possessions of the homeowner, as well as
liability insurance for accidents that may happen at the home or at the hands
of the homeowner within the policy territory. It is required for anyone who is
obtaining a mortgage.
Life insurance: A
contract between an insurance policy holder and an insurer, where the insurer
promises to pay a designated beneficiary a sum of money upon the death of the
insured person. Many people have been choosing to include critical illness
and/or disability insurance to their policies as well. This is not generally
mandatory however it is strongly recommended.
Title insurance: A contractual arrangement to indemnify
loss or damage resulting from defects or problems relating to the
ownership of real property, or from the enforcement of liens that exist against
it. You will often see title insurance required if there is a well or septic
system on the property, however many lenders have begun requiring it on all
purchases. The cost is minimal and is paid at the lawyer’s office.
Comments
Post a Comment