Tag Archives: insurance

Home insurance basics

Getting ready to buy your own home? There are a lot of boxes new homeowners have to tick off, and one of the most confusing can be insurance. Certain types of insurance are mandatory and others are optional…. but highly advisable. Here are 5 types of insurance the experts want every homeowner to have.

HOME INSURANCE

While not legally required, it’s nearly impossible to get a mortgage without proof of home insurance. But why would you want to leave your biggest investment unprotected? Home insurance covers the rebuilding or replacement value of your house, detached structures such as a garage, your contents, plus personal liability if anyone gets hurt on your property.

Be sure to read the fine print and find a plan that works for you. Standard policies may not include things like earthquakes, termite damage, or certain types of flooding. If these are relevant to you, look into additional coverage.

The cost: Varies depending on coverage, home value and additional factors

CONDO INSURANCE

Many condo owners think their condo corporation’s commercial condo insurance covers their unit, too. This is not the case. It is limited to common areas like the building structure, its exterior and shared spaces like the lobby or elevators. You’ll need a personal condo policy to protect your own unit, its upgrades and contents (including those stored in your locker).

Personal condo insurance isn’t legally required, but most mortgage lenders consider it mandatory. You should too, says Steve Totani, a real estate broker with Zolo Realty in Toronto.

Totani provides the example of a small condo building that experienced massive flooding as the result of a plumbing problem. Owners’ homes were ruined as were their belongings. “Once the units were repaired, they each got an empty unit with four dry walls. Property insurance would have brought a condo owner’s unit back to how it was, for example, granite countertops and better appliances. Just relying on the condo’s [building] insurance is a big mistake. Paying $20 or $30 a month extra can save you tens of thousands of dollars in that sort of situation,” explains Totani.

The cost: Varies depending on coverage, condo value and additional factors

TITLE INSURANCE

A property’s title is the legal proof of its ownership. When you buy a home, the owner signs the deed over to you. Title insurance protects you against challenges to your ownership or issues relating to your home’s title, such unpaid liens, encroachment issues, fraud, and other issues that could prevent you from selling, leasing or mortgaging your property. (You can read more details here.)

Toronto real estate lawyer Bob Aron writes that “most real estate lawyers today regard title insurance as a critical component of the [real estate] transaction and will usually not close a purchase without it.” Likewise, most lenders make it a requirement for financing.

The cost: A one-time premium based on the value and location of the property, generally in the $225 to $325 range.

MORTGAGE DEFAULT INSURANCE

Mortgage default insurance (also known as “mortgage insurance”) is mandatory on all high ratio mortgages. Those are mortgages with a down payment of less than 20 percent of a home’s purchase price.

This insurance protects lenders in return for qualifying borrowers with as little as 5 percent down, making it a win for both parties. Without mortgage insurance, homeownership would be impossible without a sizeable down payment.

The cost: Between 2.8% to 4% of the mortgage amount. This can be rolled onto the mortgage so it’s not an out-of-pocket expense.

LIFE INSURANCE

“Life insurance is the type of insurance that’s overlooked the most often” says Totani, the Zolo Realty broker.

“People ask about mortgage rates, property tax, property insurance, and their monthly payments, but I hardly ever hear anyone asking, ‘Should I top up my life insurance policy?’ to ensure their mortgage is paid off and their family is not going to be out of their home,” in the event of a tragedy, says Totani.

Totani advises checking your policy and upgrading it if needed, to reflect your homeownership situation. The peace of mind this provides will be worth the effort. 

The cost: Varies depending on life insurance type, coverage, and personal factors.

Source: by 8Twelve Mortgage

Tagged , , , , , ,

CMHC Acknowledges Its Role In Forced Resettlement Of Black Canadians

The Africville Museum is seen on the site of the former community of Africville in Halifax, M.S., Tues....
The Africville Museum is seen on the site of the former community of Africville in Halifax, M.S., Tues. Feb. 24, 2015. Canada Mortgage and Housing Corp. has acknolwedged its role in the forced resettlement of Africville residents as well as a lack of diversity in its ranks today.

“We reject racism, white supremacy and wish to atone for our past racism and insensitivity,” the mortgage insurer said.

Canada Mortgage and Housing Corp. acknowledged a lack of diversity in its ranks and its role in past acts of racism on Friday as it pledged to overhaul how it does business.

The federal housing agency said it will re-assess all of its practices through a racialized lens to an effort to eliminate discrimination.

It also used the statement to acknowledge its role in funding the forced resettlement of Black people, most notably from Halifax’s historic Africville and Hogan’s Alley in Vancouver.

CMHC’s decision was prompted by anti-Black racism demonstrations held across Canada and the U.S. after the death of George Floyd, a handcuffed Black man in Minneapolis who pleaded for air as a white police officer pressed his knee against Floyd’s neck for nearly nine minutes.

Watch: Trudeau addresses racism, systemic discrimination in Canada. Story continues below.

“We haven’t done nearly enough. CMHC must set a high standard,″ the agency said in a statement.

“We must all stand together with our Black co-workers and the victims of murder, oppression and the systemic racism that exists everywhere.”

Black people make up 3.5 per cent of Canada’s population and 5.2 per cent of CMHC employees.

Those who are Indigenous amount to 4.9 per cent of the national population and 2.4 per cent of the CMHC workforce.

“At CMHC, we would once have congratulated ourselves for our diversity,” CMHC said.

“This is however no achievement when too few of our people leaders are Black or Indigenous ― none among senior management. And diversity isn’t enough: it’s where we start.”

RELATED

Kike Ojo-Thompson, who runs diversity, inclusion and equity consultancy Kojo Institute, said CMHC’s statement seemed like it was written in the voice of someone who really understands the moment the country had been plunged into.

She found it interesting that CMHC was so forthcoming with data around their Black and Indigenous employees, “particularly because their numbers are so low.”

“The first step to an accountability framework and accountability approach is to actually show your data, so that you as well as the community can know what the target is,” she said. “If you’re low, we know you’ve got to get from zero to three, or three to five, and we’re not going to expect 10 tomorrow… so exposing the data is very helpful.”

Among the measures announced Friday, CMHC said it will create specific targets for adding Black and racialized people to its leadership and senior management ranks.

Evan Siddall, president and CEO of Canada Mortgage and Housing Corp in an interview on June 16,
Evan Siddall, president and CEO of Canada Mortgage and Housing Corp in an interview on June 16, 2014.

It will offer leadership training and professional development to support the progress of Black and racialized employees and provide mandatory anti-racism training for all staff.

People with lived experience of racism will now be involved in a re-assessment of CMHC’s recruiting, evaluation and promotion processes and its diversity and inclusion efforts.

“We reject racism, white supremacy and wish to atone for our past racism and insensitivity,″ CMHC said.

“Racism has been built up and reinforced for centuries, whether against Black, Indigenous people or people of colour. Only a sustained and focused effort will eliminate it.”

Ojo-Thompson said there were some measures missing from the statement.

She would have liked to see CMHC mention an external advisory body.

Such a group must be external, she said, because it offers protection and accountability in organizations that may otherwise punish people who speak out.

She also wanted more clarity around who exactly came up with the new policies and promises CMHC made and how much flexibility they offer if people suggest further ideas.

“What you’ve told me is, ‘This is what I’m going to do,’ so my question is, ’If I say that there’s something missing, will you do that or is this all?‴⁣

Source: Tara Deschamps Canadian Press Updated 06/14/2020 10:19 EDT

Tagged , , ,

HOME INSURANCE 101

HOME INSURANCE 101

Whether you’re a homeowner or a tenant, your home deserves to be properly protected. Unlike auto insurance, home insurance is not legally required by the government. Instead, it may be deemed as a requirement by anyone who has a financial interest in the property. For example, a landlord can require tenants to maintain specific insurance coverage while renting the dwelling. Similarly, a mortgage company can stipulate that homeowners maintain adequate insurance at all times, which is a way to protect their interests.

Now that we know why other people are interested in you having home insurance, let’s focus on why home insurance is, and should be, important to you. Let’s start by defining what it actually is. Homeowner’s insurance provides you with protection against damages that may occur to your home. For example, fire or flood damage (to name a couple) could be quite costly to repair — not to mention when the damages are beyond repair and require replacement or rebuilding. Your home insurance policy is there to cover you should such incidents occur.

In addition to covering damages to your dwelling and other structures, your home insurance policy provides coverage for your personal property. Insurance companies commonly refer to your personal property as contents. Each policy has a defined monetary limit when it comes to contents. When purchasing a tenant’s insurance policy, this limit is usually set by you.

A handy way to determine an appropriate contents limit is to create a personal inventory. This document lists all of your belongings room-by-room, along with their value. The total value of all the items is the total amount of contents you’re wanting to insure through a tenant’s policy. A homeowner’s policy, on the other hand, handles contents limits a bit differently: usually, this limit is a percentage of the total cost calculated to rebuild the home.

A home insurance policy also provides you with coverage for liability. As with auto insurance, your home insurance policy protects you in the event a third party attempts to take legal action against you as it relates to your home. Liability coverage also comes in handy when you may be held responsible for damage to a third party’s property. One of the factors to consider when choosing your liability limit is the exposure you may have to risks. If you operate a home-based business, for example, you could be vulnerable to additional risk because you have a higher volume of people visiting your house. Having tenants is another example of liability risk.

The next time you’re shopping for a home insurance quote using the traditional route, keep in mind the multitude of details you’ll need to organize to help ensure a hiccup-free process (see our helpful checklist below). With aha insurance, however, we can save you a lot of time and hassle because the entire process is completed online, leveraging secure, state-of-the-art technology. In fact, the only information you’ll need to know for a home insurance quote with aha insurance is your address!

Checklist:

1) Address
Okay, we know this one sounds like a no-brainer, but it’s important to specify your exact address when getting a home insurance quote. This is particularly important for those who live in more rural regions with rural routes.

2) Insurance Information
If you have a current home insurance policy, ensure you know its details, such as the renewal dates. It’s also useful to know what your current coverages are, including replacement costs.

3) Claims History
Be prepared to share the details of your home insurance claims history. You’ll also want to make sure you have the specifics about how the claims were settled, including the amounts that were paid out as well as the reason for the claim (e.g., water damage, hail damage, theft, etc.).

4) Home Occupant
Who will be living with you? If you rent out rooms or the basement of your home, provide this information to ensure you have the proper protection.

5) Property Details
Know your home, inside and out. You should know your home’s approximate living space. You should also make note of its construction, including the year it was built and the materials used. Details about your plumbing, electrical, heating and roofing will also be required. You should be aware of the materials, as well as the most recent dates they were updated. You should also note how close your home is (in metres or kilometres) to the nearest fire hydrant and fire station.

6) Personal Belongings
How much stuff do you have? If you’ve ever created a home inventory, now is the time to refer to it (and update it). Your home insurance quote will automatically calculate an amount for your contents, but if you have anything that should be given particular attention due to its value, such as jewellery or expensive antiques, you’ll want to include it.

When it comes to home insurance coverage, every insurance company sets their own requirements for the information they’ll request in order to provide you with a quote. But if you keep this checklist in mind, you’ll certainly be prepared for whatever they’d like to know.

If you’re looking to upgrade insurance coverage, we invite you to get started with an online quote. When you purchase home insurance through Hudson’s Bay Financial Services and aha insurance, you’ll be eligible to receive up to 4,000 Hudson’s Bay Rewards points.1

Source: HudsonsBayFinancial.com

Tagged , , , ,

Why a 20% home down payment may not be worth it

Source: The Globe and Mail – Rob Carrick

Rob Carrick

It’s tough to feel financially prudent when buying a house these days.

That’s why an increasing number of first-time buyers are saving a down payment of 20 per cent or more. In doing so, they avoid having to buy mortgage default insurance which, in the case of a house price of $487,095 (the national average) bought with a 10 per cent down payment, would be 3.1 per cent or $13,590. This premium is generally added to the mortgage, which means more interest to pay.

It certainly sounds financially prudent to make a 20-per-cent down payment where possible, but this isn’t always the case. In fact, you may save money both now and in the future by making a slightly smaller down payment and taking on the cost of mortgage default insurance.

Listen up if you’re concerned about the new mortgage lending rules that were announced last week and will take effect on Jan. 1. When making a down payment of 20 per cent or more, the new rules require that you be able to qualify for a mortgage at the greater of the five-year benchmark rate published by the Bank of Canada, or the original contractual rate plus two percentage points. An easier path to a mortgage may be to make a smaller down payment.

To even propose this seems bizarre. “The story has been that you’re just throwing money away with mortgage insurance,” said Mike Bricknell, a mortgage agent with CanWise Financial. What this thinking ignores is the way today’s mortgage market discriminates against people who make down payments of 20 per cent or more. They may pay a fair bit more for a mortgage than someone with a high-ratio mortgage (down payment of less than 20 per cent) both now and on renewal.

A lender dealing with a client who has a sub-20 per cent down payment can take comfort from the fact that the loan is covered by government-backed insurance that is paid for by the borrower. A conventional mortgage (20 per cent or more) can be insured as well, but by the lender. All in all, a high-ratio mortgage is preferable from the lender’s point of view and often results in a lower mortgage rate.

Mr. Bricknell has lately found that rates on five-year fixed rate mortgages are about 0.45 of a percentage point less for high ratio as opposed to conventional mortgages. Maybe your lender can do better than that. If not, consider this example of how a down payment less than 20 per cent can pay off.

We start with a $450,000 house and a buyer with a 20-per-cent down payment already saved. With a conventional mortgage amortized over 25 years, Mr. Bricknell figures this person could get a five-year fixed rate mortgage at 3.29 per cent. That means a monthly payment of $1,758.

Now, let’s see what happens when this borrower makes a 19-per-cent down payment. A smaller down payment means borrowing a bit more, and thus more interest over the life of the mortgage. Also, mortgage insurance will be required at a cost of $10,206. All of this nets out to a monthly payment of $1,743, with the mortgage insurance premium included. How is this possible? Mr. Bricknell said it’s because the high-ratio borrower gets a mortgage rate of 2.84 per cent.

There’s a stress test for high-ratio mortgages as well, but it’s marginally less onerous than it is for conventional mortgages because you only have to be able to handle the Bank of Canada benchmark rate, currently 4.89 per cent. Thus the high-ratio mortgage in Mr. Bricknell’s example would have a qualifying rate of 4.89 per cent and the conventional mortgage would be at 5.29 per cent (the client’s actual rate plus two percentage points).

The two mortgages outlined by Mr. Bricknell are pretty much a wash right now when compared on cost. Looking ahead, the high-ratio mortgage offers the potential for lower interest rates when it’s time to renew your mortgage. This assumes that lenders will continue to look more favourably at high-ratio mortgages.

Mortgage industry data show that even as house prices increased from the early 2000s through the past few years, the percentage of people making down payments of less than 20 per cent has declined to 39 per cent from 54 per cent. If the rationale for this is to save money and be financially prudent, a rethink is required. Depending on the rates offered by your lender, a slightly smaller down payment could save you money in the long run.

Tagged , , , , , ,

Why Canadians who own Florida homes need both hurricane and flood insurance

About 3 million Canadians visit Florida every year, and thousands own property there. So with Hurricane Irma threatening to do heavy damage to the state, should those property owners have flood or hurricane insurance?

The short answer is yes, they need both.

The latest forecasts suggest Irma’s winds could carve up much of Florida’s coast, damaging property from the Florida Keys through Jacksonville, and some experts say this could become the costliest storm in U.S. history.

For Canadian owners of property in Florida, the one bit of good news is that Irma is moving swiftly and should bring less than a quarter of the rain that Hurricane Harvey dumped on Texas when it stalled over the state. South Florida is also used to flooding and has a better flood control system than Texas.

Still, Irma could still cause significant water and wind damage. That’s why property owners need to be sure they have both hurricane and flood insurance – two distinct policies, says Brad Hubbard of National Flood Experts, a U.S.-based company that helps homeowners decide what kind of disaster insurance they need.

“If you have home insurance or even hurricane coverage, it does not cover flood. And flood insurance does not cover hurricane (damage). They are two, totally separate policies,” he told CTV Toronto from Tampa, Fla.

For Canadian snowbirds hoping to buy last-minute coverage before Irma hits, they will find they are out of luck. Most flooding polices must be purchased 30 days before a storm.

Property owners in areas known as Special Flood Hazard Zones are required to have federal flood insurance, through the National Flood Insurance Program (only a few private insurers offer flood insurance in Florida.).

In fact, U.S. mortgage lenders are required to make sure property owners living in flood hazard zones have the insurance in order to qualify for federally-backed loans.

Yet, according to an investigation by The Associated Press, just 42 per cent of homes in Florida’s 38 coastal counties are covered. In the counties currently under partial evacuation orders, only 34.3 per cent have proper coverage.

With storms becoming more severe and arriving more unpredictably, purchasing flood insurance is simply a smart investment for Canadians, says Hubbard.

Because Florida is particularly vulnerable to hurricane damage, many private insurance companies are reluctant to offer coverage to property owners who live in southern, coastal areas of the state.

That’s in part why the Florida state government created Citizens Property Insurance Corporation, a non-profit government agency that provides insurance to owners unable to find insurance in the private market.

Citizens’ spokesperson, Michael Peltier, says insurance premiums can vary depending on the type and the location of a property. He says premiums for “multi-peril insurance” — which includes hurricane coverage — in Miami-Dade County, for example, can range from an average of US$930 for a condominium unit, to $3,400 for a single-family home.

The same insurance in Orlando, Orange County, will cost an average of $1,400 for a single family home, simply because the county is further inland.

He recommends that Canadians who own property in Florida should ensure they are fully protected, before storms like Irma arrive.

“We would urge them to contact their insurance agent to make sure they have the coverage they need,” he told CTVNews.ca.

Source; With a report from CTV Toronto’s Pat Foran and files from The Associated Press

Tagged , ,

New program will help first-time homebuyers in BC, but is it a good idea?

first-time buyers bc

 

New program will help first-time homebuyers in BC, but is it a good idea?

It looks like Christmas has come early, at least for some BC house hunters. The BC government has revealed plans to launch a new program for first-time buyers, and it’s expected to help as many as 42,000 households in the province enter the market.

Announced December 15th, the BC Home Owner Mortgage and Equity Partnership program will see the BC government match the amount of money first-time buyers put toward their down payment, to a maximum of $37,500. Loans will be interest free for five years, and recipients won’t have to start paying the money back during that time. Once five years have passed, they will be expected to begin making monthly payments at current interest rates.

“We believe every British Columbian deserves a place to call home,” Premier Christy Clark said in a press release. “We’ve invested in affordable rental housing, we’ve invested in transitional and emergency housing, and now we’re partnering with first-time buyers to make the purchase of their first home more affordable.”

The news came the same day that the BC Real Estate Association released its latest data on residential real estate sales and prices. While it shows that in November the average MLS price for a home in the province fell 6.4 per cent year-over-year to reach $625,871, that’s still out of reach for many first-time buyers.

First-time buyers hoping to participate in the program will have to meet a number of requirements in order to be eligible. For starters, applicants must be planning to buy a home for $750,000 or less and have total annual household income of $150,000 or less; they must also be preapproved for a high-ratio insured mortgage. Other requirements include being a Canadian citizen or permanent resident for at least five years, and living in BC for at least one year.

Reactions to the program have been mixed. While some have taken to Twitterto voice optimism about it, many people, including several key BC housing market commentators, have expressed concerns.

Speaking to The Times Colonist, Tom Davidoff of UBC’s Sauder School of Economics said that making it easier for people to buy homes when the province’s ability to increase housing supply is limited may drive up home prices. “I just think it’s lousy economics,” he said. NDP housing critic David Eby also pointed out that if interest rates are higher in five years, those who participate in the program will be at an increased risk of defaulting on their mortgages.

The program will start accepting applications on January 16th, 2017, and the BC government plans to invest about $703 million in it over the next three years. As there is no cap on the initiative it could eventually be expanded.

Sources: BuzzBuzzHome 

Tagged , , , , ,

Hurricane Matthew: Before it hits, take these insurance precautions

AP HURRICANE MATTHEW NORTH CAROLINA A WEA USA NC

America hasn’t seen a storm as strong as Hurricane Matthew in a decade, and the damages could be epic. The Consumer Federation of America predicts as many as 100,000 insurance claims for wind damage, and payouts for damages likely will exceed $7.4 billion.

As residents board up windows and stock up on bottled water, if they have time to safely do so, they should also consider preparing for the possibility that they soon could be facing an insurance claim.

Before the storm

The CFA offers these three tips:

  • Locate your homeowners or renters policy, and make sure it’s in a safe place where you can reach it after the storm.
  • Review your policy to find out how and where to report a claim.
  • If possible, document your belongings with photos or a video tour.

The Property Casualty Insurers Association of America also recommends a thorough documentation. A home inventory can be vital to ensure you get the most out of your insurance policy, said Don Griffin, vice president of personal lines for PCIAA.

“You see your stuff every day, but if you don’t have a picture or a video of it, you won’t remember,” Griffin said.

PCIAA recommends using a smartphone to supplement an inventory with photos and videos inside the home. You should save your inventory in a disaster-proof form, such as email or cloud-based note-taking services.

The more detailed the list, the better, said Joshua Butts, owner of Cornerstone Insurance in Tampa. That means tallying the contents of drawers and the make and model of furniture, TVs and other big-ticket electronics. A detailed list gets an owner more money back in a loss, and they get it back more quickly, Butts said — instead of dickering over the exact nature of lost items, insurers have the lists, photos and videos right before them.

“What you document is what you get back,” Butts said.

In addition to documenting your possessions, keep track of any expenses you incur to mitigate damage, like boarding up windows, because they may covered.

After the storm

The CFA recommends that you:

  • Report your claim as soon as possible, because they’re usually handled on a first-come, first-served basis.
  • Be sure to get a claim number and write it down. It’s the quickest and easiest way for insurance companies to locate your file.
  • Keep good records of anything you spend to make immediate repairs to secure your home. Also keep receipts for hotels or meals if you can’t return home right away after the storm.

After you file your claim

  • Immediately start a notebook with all contact information of the people you deal with from your insurance company, the CFA recommends. List the date, time and topic of conversations. Note any problems, as well. Documentation is key to resolving problems later.
  • Get a repair estimate from a local contractor you trust to use as a guide in talking with the insurance adjuster.

And, finally, if you’re considering skipping filing a claim because you’re worried about future premium hikes or policy cancellations, don’t.

“You’ve paid your premium and are entitled to coverage,” the CFA wrote in a release. “If you have a legitimate claim, do not hesitate to file it.”

Source: , USA TODAY8:13 a.m. EDT October 7, 2016

Tagged , , ,