Buy Home Insurance Before Wildfire Season, Say Experts
Buying or selling a home is often a stressful process. In the midst of the numerous details, few think about the implications of home insurance. With wildfire season quickly approaching, the Insurance Bureau of Canada is warning that's a mistake. Failure to lock in a policy early can result in coverage denial or expensive policies if you are near a wildfire risk zone.
The Potential Gap Between Purchase and Sale
Here is one way you may end up uninsured. Many people arrange to have their current home insurance cancelled before moving to the new home. However, if the new home is in an area at risk for wildfires, insurers may deny coverage. There's a domino effect that happens. Your lender may refuse to issue funds and the purchase falls through. Even if you can stay in your current home, you may have already arranged for your current policy to end.
Insurers Tolerance of Risk
Insurers look at risk when deciding whether to cover a property. There are many factors that may come into play when it comes to fire risk. Those include when the property was built and its proximity to fire rescue crews, in addition to whether there's an active wildfire. Current wildfire activity doesn't always mean home insurance isn't available. But some underwriters have blanket prohibitions against new policies within a certain number of kilometers of activity. Sometimes, those blanket no-insurance zones are quite large: a 50 km distance away, and the prohibition isn't lifted until the fire is 100 percent contained.
How Homeowners End Up Paying More
The result is that those in the midst of a home sale have a couple of options. They can shop around for insurance at the last minute. They may land on a high-risk insurer who will give them coverage on the new property. This might help the sale go through, but leave them on the hook for expensive premiums. They can also try to prevent the cancellation of their current policy in case the purchase won't go through.
How Experts Say You Can Protect Yourself When it Comes to Insurance
What does the IBC recommend? In a press release issued in conjunction with the BC Real Estate Association, they are telling people to think ahead. If you are planning to buy a home, include an insurance clause in the purchase offer. Similar to a finance clause, it would allow you to back out of the sale if you can't find satisfactory insurance. That way, you're not on the hook if you can't insure the new property. If you are selling, don't cancel your current policy until the sale is complete. In addition, they advise everyone to get insurance before there's a risk of wildfire in their area.
Find the Right Insurance For Your Future Home Today
Choosing the right insurance is an important part of home ownership. To get the right coverage early, before wildfire season starts, check out coverage options on Kanetix.ca. You can compare lenders to find the right price, and the right protection for your and your family's future.