More buyers are coming off the sidelines and looking to enter the market. Prices are high, so protecting your investment and home is more important than ever.
What insurance will you need to protect your new home? A quick Google search will turn up title and home insurance entries. They each protect consumers but from very different things. Here’s a quick breakdown of each type of insurance and why appropriately protecting yourself takes both:
Title insurance
What is title insurance?
Title insurance protects your right to own your property. It deals with hidden issues your home may have and future risks like fraud. This is just some of what title insurance covers:
- Title defects that can keep you from selling,
- Title fraud and home title theft,
- Encroachment and access issues,
- Tax arrears and unpermitted work from previous owners.
Want to know more about title insurance coverage?
How much is title insurance?
You only pay once for title insurance, usually between $250—$1000, depending on where your home is and how much you bought it for. Premiums will often be based on purchase price or current market value. There are no monthly or annual payments, and your coverage lasts for as long as you or your heirs have an interest in the property. This is arranged with the lawyer or notary when you complete your purchase.
Home insurance
What does home insurance cover?
Home insurance covers four main things:
- Damage to your home or other structures on the property,
- Lost, damaged or stolen valuables, depending on your policy,
- Liability for accidents or injuries that happen on your property,
- Losing use of your home because of an event covered by your home insurance (usually to do with damage to the house).
How much is home insurance?
It varies, but the average cost of home insurance can range between $1,000-$2500 per year. Your price can change yearly if you switch providers or update your coverage. Many home insurance policies also allow you to purchase additional coverage, like flood protection, which increases your premiums. The higher your insured value is, usually affects your annual premium. Home insurance can be paid in a lump sum annually or can be paid monthly with most providers.
Which do you need, home insurance or title insurance?
They cover very different things, so you need both. It’s the only way to protect both your home itself and your ownership of it. Home insurance is required by all mortgage lenders for all single detached homes and if you are purchasing in a strata, you will want appropriate coverage for your strata insurance deductible as they can be extremely high.
- Title insurance doesn’t cover most property damage, lost or stolen items, or medical/injury liability.
- Home insurance doesn’t cover fraud, back taxes, or the City forcing you to alter or remove structures on your property.
Example of a title insurance claim
A north Ontario homeowner and her neighbour had discovered that her water and sewage lines didn’t connect to her street. Instead, they related to the next road via her neighbour’s property. They forced her to relocate her water and sewer lines at a huge expense.
But fortunately, she had a title insurance policy in place with FCT. We stepped in to resolve the issue for her, and we were able to cover the total cost of moving her water and sewer lines.
Paid: $115,284.32
Without title insurance, where would the homeowner, in that case, have come up with $115,000? The risks title insurance protects you from are unpredictable and expensive. If you don’t have title insurance and home insurance, the truth is that you’re at risk.
How can you get protected?
You can get title insurance coverage, even if you own your home with an existing homeowner’s policy. But the best time to start protecting your new home is while purchasing it. Talk to your lawyer or notary about title insurance from FCT or other providers, or learn more about residential title insurance here.
For Home Insurance, we have some great partners that we will offer to connect you with at the time of your mortgage completion. They too are brokers so they will shop the insurance market for you to ensure you are getting the best coverage with the best premium.
Have any questions about your next purchase? There are never too many questions when it comes to protecting your home. Give us a shout at 604-552-6190 if you ever have any questions.
Trish & The Primex Team