Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

June 8th - 2004

Task force seeks solutions to growing insurance problems

Obtaining property insurance at a reasonable premium has become increasingly difficult for some homebuyers over the past few years.

Obtaining property insurance at a reasonable premium has become increasingly difficult for some homebuyers over the past few years.  Many insurance companies that once underwrote property insurance are now declining applications sometimes resulting in real estate transactions that fall apart.

 

“The ability to obtain property insurance is a critical component of any real estate transaction,” David Armstrong, Chair, OREA Property Insurance Task Force told representatives of the Insurance Bureau of Canada (IBC) at a recent meeting.  “Simply put, without home insurance, you cannot obtain a mortgage, and without a mortgage, the transaction dies.”

The OREA task force is hoping to work together with the IBC to look at some of the difficulties faced by REALTORS and to open up the lines of communication between the real estate and insurance industries.  Task force members include REALTORS and representatives from the new home building industry, the home inspection industry and the insurance business.

Some of the reasons given by the insurance industry for turning down a property include perceived hazards such as knob and tube wiring, aluminum wiring or 60 amp service.  Other factors related to environmental concerns like mould or oil tanks as well as factors unrelated to the property such as the creditworthiness of the applicant or the fact that the owner may have a certain breed of dog.  “We believe thousands of real estate transactions have fallen apart, been delayed or expensive retrofits demanded as a result of stricter underwriting requirements,” said Armstrong.

Some of the steps to improving access to property insurance OREA and the IBC are looking at include:

  • A form of regular communication that alerts OREA to the “red flags” or potential problems insurers look for when making underwriting decisions.
  • Insurance industry should provide OREA with a “standard form” application for home insurance which lists the common eligibility questions asked when applying for a policy.
  • OREA to work with IBC on the revision of IBC’s home insurance consumer brochure to incorporate information on insurance issues surrounding buying and selling a home. OREA would like to work with the insurance industry to develop detailed brochures on specific insurance issues such as mould, grow houses or oil tanks.
  • OREA may consider modify the SPIS to include some of the items “red flagged” by the insurance industry.
  • Undertake discussions/research on how to match insurers to consumers in smaller/rural markets where coverage can be difficult to obtain.

Armstrong concluded his remarks by saying, “REALTORS understand that insurance companies have the right and the responsibility to consider risk factors when offering coverage or setting premiums, but we believe that the insurance industry does consumers a disservice when they simply refuse to offer coverage at any price. We want to work with you to educate prospective purchasers about the changing environment for property insurance so that they and REALTORS can take whatever steps are necessary to ensure that real estate transactions do not fall apart because they cannot obtain insurance.”

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For more information contact

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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The trademarks REALTOR®, REALTORS®, and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.

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