Homeowner's Insurance Binder
- Pranav Khemka Thursday Tidbit
Home insurance protects against fire and other potential incidents that may require repair or replacement of your home and belongings. Before a lender is willing to fund a loan, they require their borrower(s) to arrange for a satisfactory home insurance policy. Without valid insurance protection in place, a buyer’s lender will not fund a loan on the expected Completion Day – as the property is their security for advancing the loan.
Most lenders require evidence of insurance against fire and other hazards for not less than the full replacement value of the property with loss payable to them as first mortgagee. Evidence is provided in the form of an insurance binder. The insurance binder is a 1-to-2-page document that summarizes important details of your insurance policy (ex: the coverage, the names of the insured, the name of the lender as first loss payable, etc.) and verifies that the property will be insured come Completion Day.
Prior to approaching an insurance agent / private insurance company, buyers should obtain a spec sheet of their home so they will be able to answer any questions regarding the property. The spec sheet should cover, among other things, the following items:
The year the home was built;
The type and age of the roof (ex: shingles);
The style of the home (ex: split-level);
The exterior finish of the home;
Whether there is a garage on the property and its size;
Square footage of the home;
Number of bathrooms, kitchens and fireplaces;
The improvements to the home (ex: new roof, central air conditioning system, etc.);
The use of the home (ex: single-family or multi-family);
Safety devices (ex: security systems or fire sprinklers);
Type of electrical service / wiring in the property;
Type of foundation (ex: poured concrete slab); and
Material types for floor covering (ex: hardwood), ceilings (ex: drywall) and wall surfaces (ex: wallpaper)
Most of this information, if not all, can be found on the MLS® listing. As such, purchasers can contact their real estate agent to obtain a copy of the listing prior to meeting with their insurance broker or insurance company.
If you have any questions concerning the homeowner’s insurance binder, please don’t hesitate to contact Khemka Law or counsel of your choosing. If there’s a topic you’d like us to cover, please let us know! We are always here to assist you. Thank you for taking time to read this Thursday Tidbit.
Pranav Khemka, Barrister & Solicitor T: (403) 457-9577 | F: (403) 457-9578
LEGAL: The Thursday Tidbit provides general information and does not constitute legal advice. Circumstances may vary and no lawyer-client relationship is established from the use and reliance of this information. You are strongly advised to seek any legal advice by directly contacting Khemka Law or counsel of your choosing. Khemka Law does not warrant or guarantee the quality, accuracy or completeness of any information found within this Thursday Tidbit.