November 25th - 2003

Merv's column

A lesson in perils and price

A lesson in perils and price
Home insurance coverage and costs vary dramatically depending on the type of perils covered and the exclusions, the type of building, its location and other risk factors. Because of this, buyers should discuss their planned purchase in tail with their insurance advisor before making an offer, or use a conditional clause such as OREA’s new clause regarding insurance.

Typically there are residential policies that are either (1) “Standard Form” which list the risks insured, (2) “Broad Form” which is an all risk policy for the building only, and (3) “Comprehensive Form” which is an all risk policy for the building and its contents.

A Standard Form list may include some of the following: fire, lightning, explosion, smoke, falling object, impact by aircraft or land vehicle, riot, vandalism or malicious acts, water escape/rupture/freezing, windstorm or hail, glass breakage, theft and transportation.

An All Risk policy may add these: mysterious disappearance, animal damage, paint spillage/overspray, building collapse.

[Merv’s pull quote: “buyers should discuss their planned purchase in detail with their insurance advisor before making an offer, or use a conditional clause such as OREA’s new clause regarding insurance.”]

Merv’s comments
Buyers need to confirm all of this with their insurance advisor and ensure that the coverage they need is available at a cost that is acceptable to them. Here is OREA’s new clause:

Conditional Upon Obtaining Insurance – Cost not to Exceed

This offer is conditional upon the Buyer obtaining insurance on the property for the following named perils:_____________________________________

At a yearly cost not to exceed __________________ excluding applicable taxes. Unless the buyer gives notice in writing delivered to the Seller not later than ___ p.m. on the ____ day of ______, 20__, that this condition is fulfilled, this offer shall be null and void and the deposit shall be returned to the buyer in full without deduction. This condition is included for the benefit of the buyer and may be waived at the buyer’s sole option by notice in writing to the Seller within the time period stated herein.

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Ontario Real Estate Association

Jean-Adrien Delicano

Senior Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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