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BC Mortgage - Types of insurances encountered when getting a mortgage |
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You will encounter a variety of insurance products throughout the mortgage process. This table provides a brief overview of the types of insurance products you can expect to run into. Insurance is a very complicated subject. You will need to consult an insurance professional (which I am not) to explain your options in more detail.
Property Insurance |
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| Home
Insurance |
Protects
your building and your belongings inside your home; A
standard home insurance policy will replace your lost
property in an event of a fire, vandalism or theft;
Ask your insurance agent about protecting other
buildings on your property (e.g., detached garage),
liability insurance (should someone be injured while
at your property), and insurance that covers hotel and
living expenses (if need to live elsewhere after your
house is damaged). |
| Condominium
Insurance |
You will
need two insurance policies. The first one is for you.
The insurance policy provides for your personal
property, for structural improvements or for items
lost in a fire, theft or for whatever disaster is
listed in your policy. A second insurance, a �master
policy� is purchased and provided by the condominium
corporation. This
covers common areas such as the roof, basement,
elevator, etc. |
Life Insurance (Optional) |
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| Mortgage Life Insurance | Pays
off your mortgage in the event of your debt.
Sold by most banks/lenders, however, their
product is usually not portable. If you decide to switch to another lender, you will need to
re-qualify. Invis
offers mortgage insurance that is portable.
An alternative to mortgage life insurance is
regular term insurance. |
| Disability
Insurance |
Pays
your mortgage should you become disabled.
Confirm with your insurance provider whether
property taxes are covered. |
| Critical
Illness Insurance |
Most
policies cover heart attack, cancer and stroke. |
| Term
Insurance |
An
alternative to Mortgage Life Insurance, term insurance
may be more suitable to your needs. Term insurance
provides a fixed amount of insurance for a specific
period of time, with renewal premiums determined at
the time of your purchase. |
Other Types Of Insurance |
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| Mortgage Default Insurance | For mortgages where the down payment is less than 25%. This insurance protects the lender against default by the borrower on the mortgage. There are only two mortgage default insurance companies in Canada, Canada Mortgage and Home Corporation (CMHC) and GE Mortgage Insurance Company. |
| Title Insurance | Protects
and fraud/forgery, title defects and survey problems.
Title insurance is accepted by most lenders in
place of a survey which is generally more expensive. |
| Home
Warranty Insurance |
Paid
by the builder of a new home. Protects against defects
in the labour, materials, building envelope and
structure. Limit
of $100,000 or first purchaser�s purchase prices
whichever is lower. |
| Repair Warranty | A
few lenders offer Free Repair Warranties on purchases.
Covers repair to plumbing, electrical, heating,
air-conditioning up to a certain limit. |
"My job is done when you know your options"
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