There are several types of insurance that may be required or helpful as part of arranging a mortgage. If you are applying for a high-ratio mortgage, you will have to pay for Mortgage Insurance, which protects the lender against default. You should also consider purchasing Mortgage Life Insurance, a form of term life insurance that pays off the balance owing on your mortgage if you or your co-borrower dies. Many lenders offer you the option of buying this insurance and adding the cost to your monthly payments. You may also want to talk to your insurance agent and compare the costs of obtaining your own independent policy. With a High-ratio mortgage you are borrowing more than the usual 75%. In this situation the Government requires that the mortgage be insured against default, and that you, the Buyer, pay the cost of the insurance. That cost can range from one to three percent of the mortgage amount, and is added to the mortgage principle.
Title Insurance is an insurance policy that provides coverage for title related risks associated with Real Estate transactions. It is designed to cover the unpredictable or undetectable issues such as fraud, forgery, missing heirs, etc. that can affect rights of ownership. A title insurance policy removes the risk associated with the title from you, the Buyer, lending institution, or Lawyer to the Title Insurer.
Below you will find 3 examples of insurance coverage and the claims paid:
Homeowner insurance policies cover the building and its contents for "direct loss" or damage caused by insured perils, which may be stated individually or merely described as "all risks." Personal liability insurance is usually also included. The "liability" component of home insurance is discussed as your liability to others. Insurance coverage on your home should begin as soon as you become the legal owner - even if the home is still under construction (the policy can also cover related building materials on or adjacent to your property). If you're about to move to a new home, ask your Broker or Agent if your current policy will cover the contents of both the old and new locations, and in transit, too. Theft insurance applies only when a building is ready for occupancy; vacant buildings are not normally insured for more than 30 days.
Condominiums are covered by two different types of insurance policies: