Insuring a first home: what to look at before you sign

Buying a first home is a lineup of decisions. Insurance usually shows up at the end, in the rush, the week before. That’s a shame, because it’s one of the few pieces of the file that goes quickly once you know what to look at.

It starts with the closing date

Your lender will ask for proof of home insurance before the signing. Not after, before. Coverage has to be in force on the day you take possession, because that’s the moment the house becomes yours, even if you move in later. The best move is to start as soon as your offer is accepted and the inspection is done. You’ll have the answers on hand, and you won’t be signing a policy in a panic the night before.

The amount you insure isn’t the price you paid

This is the most common misunderstanding. What you insure is the cost of rebuilding the house: materials, labour, demolition, bringing it up to current code. The land doesn’t burn. So the amount can land lower or higher than what you paid, and that says nothing about the value of your purchase. What counts is that it’s enough on the day everything has to be rebuilt.

What an insurer looks at in a house

• The age of the roof and the roofing material.
• The electrical service: breaker panel, fuse box, original wiring.
• The plumbing: type of pipes, age of the water heater, whether there’s a backflow valve.
• The heating: oil tank, wood stove, age of the system.
• The basement: history of seepage, drain, sump pump.
• The surroundings: distance from fire services, how close the water is.

None of that is a trap. These are things that change how likely something is to happen, and what it costs when it does. An old water heater isn’t dramatic, but it’s one of the most ordinary causes of water damage in a house. If you don’t know the answers, that’s fine: the specialist will tell you what they need to keep going.

The coverage people forget to ask for

• Sewer backup, which is almost always a separate endorsement.
• Ground water seepage, which is yet another coverage again.
• Earthquake, never included by default.
• Replacement cost on your belongings rather than depreciated value.
• Civil liability higher than the amount offered by default.
• The belongings of a kid studying away from home, when that applies.

Nobody reads a home policy cover to cover. You get it explained once, properly.

Questions to ask before you even make an offer

The seller and the real estate broker usually have the answers, and they’re worth gold: the age of the roof, the water heater, the windows and the electrical panel, whether there’s a backflow valve, and above all the history of damage. A house that has already had a sewer backup can be insured differently, even with a new owner. Better to know that before you make your offer than after you’ve signed.

After you take possession

Two habits that prevent a lot of surprises. First: tell your insurer when you do work, redo the roof, change the panel or finish the basement. It changes what would have to be rebuilt, so it changes what you should be insuring. Second: keep photos and receipts of what you own, in the cloud rather than in a drawer. On claim day, you’re the one who has to show what was in the house.

Insuring a first home isn’t like shopping a renewal. Answer a few questions about your situation, a home insurance specialist calls you back, and they look with you at what you actually need for your closing date: get a home insurance quote.