Acquiring home insurance approval before moving into your new home is an essential step in safeguarding your investment and is an important part of the mortgage approval process. Understanding the distinct requisites for single-family homes and strata properties is pivotal in ensuring comprehensive coverage for the borrower and meeting specific lender requirements.

1. Single-Family Homes: Ensuring Comprehensive Coverage

For single-family homes, obtaining home insurance involves several key components:

• Fire Insurance: Lenders typically mandate fire insurance coverage as a fundamental requirement. This insurance protects against fire-related damages and is often a prerequisite for mortgage approval.

• Comprehensive Coverage: Besides fire insurance, homeowners might opt for broader coverage, including protection against natural disasters, theft, liability, and additional hazards.

• Documentation Requirements: Providing detailed information about the property, including its value, features, and potential risks, is crucial. An appraisal might also be required, but not normally.

2. Strata Properties: Navigating Unique Insurance Dynamics

Strata properties, governed by a homeowners' association, entail distinctive insurance dynamics:

• Strata Building Insurance: The strata corporation typically carries insurance covering common areas and the building's structure. However, this insurance might not extend to individual unit contents or improvements made by the homeowner.

• Condo Owner's Insurance (Unit Insurance): Individual condo owners need to acquire insurance to cover personal belongings, liability, and any alterations made to their unit that aren't covered by strata insurance.

• Lender Requirements: Lenders often mandate comprehensive coverage for condo units, including fire insurance. It's imperative to understand what aspects are covered by the strata's policy and what requires additional coverage.

3. Where to Get Insurance Coverage and Who Needs to Know:

Where do borrowers get insurance coverage? And who needs to know that the borrower is covered? Let’s go over that now:

• Where to Get Homeowners Insurance Coverage: Most borrowers go to a local insurance broker and they will shop the best coverages for you. If you are purchasing a strata property, the lender only needs the Strata Insurance policy coverage details and your Lawyer/Notary will get that directly from the Strata Property Manager.

• Who Needs to Know about the Insurance Coverage?: Your lender needs to know but it is done through your Lawyer/Notary. Your Lawyer/Notary will ask you to arrange insurance coverage and ask for the name of your insurance brokerage company and phone number and they will take it from there. They will ensure that insurance coverage is bound, which means the insurance policy is in force, and provide that information to the lender prior to the closing date.

Navigating the Approval Process: Tips for Homeowners

• Policy Comparison: Understanding policy specifics, deductibles, coverage limits, and exclusions is vital. Comparing multiple insurance options helps in selecting the most suitable coverage.

• Reviewing Strata Insurance: For strata properties, reviewing the strata corporation's insurance policy helps in identifying gaps in coverage and determining the necessary add-ons for personal protection.

• Communication with Lender: Aligning with your lender's insurance requirements and ensuring compliance is crucial. This collaboration ensures a smooth approval process.

Conclusion: Protecting Your Investment

Securing home insurance approval is an indispensable step before moving into your new home. Whether it's a single-family dwelling or a strata property, comprehending the insurance requirements, including fire coverage for lenders, and assessing individual needs ensures comprehensive protection and peace of mind.