If you’re buying a new piece of South Okanagan real estate, you’ll want to take care to ensure that your new home is insured. And although homeowner’s insurance will cover any defects that arise after you move in, you’ll still need insurance coverage for the period of time between the start and end of the sale to protect you should any issues arise. Here’s what you need to know.
What Is Completion Insurance, and How Does it Work?
Completion insurance is a type of home insurance that protects you during the buying process. Before you’ve signed a contract, the seller’s homeowner’s insurance will cover the home, and after you take possession of the property, your own homeowner’s insurance will reimburse you for losses due to theft, fire, and other circumstances. But during a short period of time at the end of a sale – when you’ve signed your contract but haven’t yet taken possession – your new home is essentially uninsured.
Completion insurance bridges the insurance gap in the sale process, protecting the buyer and mortgage lender against anything that might result in serious property damage prior to completion of the sale.
Pitfalls of Not Having Completion Insurance
Buyers aren’t legally required to have completion insurance, but in most cases, it’s simply a good idea. Consider the consequences of not having completion insurance. In the event that the home suffers flooding, fire or earthquake damage, develops a pest problem, or is vandalized while the sale is in the completion stage, the buyer will be legally required to buy the property as-is. After all, a signed home sale contract is binding. But given that the buyer hadn’t yet taken possession, the buyer’s homeowner insurance wouldn’t cover any of the damage – the buyer would have to pay out of pocket to have the necessary repairs done.
What to Look for in a Policy
A good completion insurance policy will protect you against nearly any event that might arise between signing and completion. Unoccupied homes tend to be convenient targets for thieves, so any completion insurance policy worth consideration should protect you against burglaries. If you live in a low-lying area or an area with a history of sudden forest fires, you’ll want to ensure that your home insurance policy protects against fire and flood damage. If you plan on moving your belongings into the home before the possession date, you’ll also want to add on a contents insurance clause.
Completion insurance is a fantastic way to protect your new home from potential damages and losses that might occur during the home sale. But what other protections do buyers need? Call Remax Chamberlain Property Group to learn more about protecting yourself as a buyer.