Reasons to Have Home Insurance
There is nothing more exciting or daunting than shopping for a new home. It’s exciting to see what is available on the market and to explore new neighbourhoods, but once you make an offer, things get a bit more stressful. Waiting to see if your offer is accepted and then scrambling to meet conditions can be taxing. When it comes to securing homeowner’s insurance as part of that process, it can leave you wondering why it’s necessary. Today, we will help you understand why a home insurance offer from a broker or agent is an important part of the process.
The importance of insurance
All types of insurance are important and serve a purpose, and while getting home insurance in British Columbia to secure the purchase may seem like something that should be able to wait until the sale is finalized, there is a reason why its treated as vital.
Home insurance is a requirement of securing your mortgage with your bank. This is because homes are a huge investment, and mortgages are a giant loan that the bank agrees to give you. Part of ensuring that loan is protected is getting the home insured by the date you officially close on the property.
Imagine, you move into your new home and a week later your upper floor laundry machine floods. You come home to find water dripping from your living room pot lights. Your hardwood floors are ruined, and your carpeting upstairs is drenched through. Your homeowner’s insurance could cover all of this damage and get it cleaned up immediately. If your hardwood floors and all your carpet must be completely replaced, your insurance could pay for that. If the flood occurred because the washing machine malfunctioned, the machine will be replaced, etc.
Now under this same scenario, if you did not have homeowner’s insurance you would be on the hook to do all these costly repairs out of pocket. Thousands of dollars of destroyed material would need to be replaced or repaired, on top of the cost of labour for professionals to do the repairs or replacements. Because this is unrealistic for you financially, you purchase a bunch of fans and do your best to dry your carpets. You buy a dehumidifier and hope its enough to save the hardwood. Weeks go by and you realize certain patches of the hardwood are ruined, but too expensive to replace right now. Despite all your efforts you were not able to dry the carpets thoroughly and you can smell mildew in the air upstairs.
A year goes by and your company asks you to head up a new office in another province. You get a raise and a new adventure. You have the home appraised so you can get it on the market and learn that it is worth less than what you paid for it. Your Realtor tells you that you clearly have a mold problem upstairs and the damaged hardwood floors are unsightly. Selling at the price you bought it at (or higher) is unrealistic. You now must sell your home for less than what you owe on your mortgage. This is bad for you, and for your bank.
The above scenario is not far-fetched, it clearly illustrates the benefits of homeowner’s insurance and why a bank will not approve a mortgage on a home that isn’t insured. The process of getting a home insured is also important because if a home is considered “uninsurable” for reasons such as bad wiring, asbestos, unstable geography etc., it can save you from making a major purchasing mistake, and saves the bank from investing in a high-risk property.
In Canada homeowner’s insurance is mandatory if you have a mortgage, and it is there to protect the bank’s investment as much as it is to protect your quality of life and financial health. If you have questions about home insurance in BC, contact us today to discuss your needs. We have the all the resources you need to learn more about insurance British Columbia policies. [more]