After I bought my house, I asked my insurer to provide coverage for the property. They refused to insure it. What can we do?
There are two aspects to your question that need to be addressed.
There’s the real estate aspect, which is about the disclosure issues with the home you purchased.
And there’s the insurance aspect, which is about how you can obtain insurance moving forward.
I’ll start with the insurance aspect. It’s not my area of expertise, so we spoke to the Insurance Bureau of Canada (IBC) to learn more.
According to IBC, insurers look at many factors that affect your premium or your ability to obtain insurance. The home’s major systems, like heating, electricity and plumbing play a big role. For example, homes with old wiring are at higher risk of fire and older plumbing is more likely to crack or leak.
The location of the property is also a factor. Insurers consider the claims history of your neighbourhood to help understand its unique circumstances. They also look at how close you are to a fire hydrant or fire station.
According to IBC, there are many insurance options in Ontario, so if you look around you should be able to find coverage. They emphasize that shopping around for insurance is always a good idea.
If you want to learn more about home insurance, there’s a lot of information on IBC’s website. Take a look at www.ibc.ca.
With that in mind, I’d like to circle back to the real estate aspect. In this case it’s not really about the insurance claim, but about the issue that led to the insurance claim in the first place.
Sellers are obligated to disclose defects that are hidden from view and that could prevent you from fully enjoying the use of the home, if they are aware of them. Real estate salespersons or brokers who represent the seller must also disclose such defects if they are aware of them.
Note that this disclosure requirement doesn’t apply to defects that are visually obvious. Disclosure is also not required if the defect has been repaired. If you believe that the seller did not disclose an issue that they should have told you about, you should seek legal advice.
This is also a reminder that buyers should make sure they know about the condition of the home’s major systems before they close the deal.
When you’re considering a property, it’s a good idea to request that your real estate professional ask about the home’s history for fires, floods, and even damage from ice storms. You might also ask
specifically about the property’s history of insurance claims.
In addition, a qualified home inspector can identify underlying issues with the furnace, roof or plumbing that could affect your decision to buy.
Buyers might want to consider making their offer conditional on a satisfactory home inspection.
That’s something to keep in mind for the next time you’re in the market for a home.Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.