Fires and home insurance
Sep 11, 2012 / 5:00 am
Last I heard, over 1500 people have been evacuated in Peachland, B.C. because of the forest fire. I am one of those people...
After packing up, leaving, and watching the fire steadily creep down the mountain, I resolved that I wouldn’t write a column this week.
Today, as I have some time waiting to hear whether or not I can move back in and (more importantly) whether or not my home ‘survived’ the fire, I decided that I would write about an issue that will likely affect numerous people who have been evacuated.
The topic this week: when purchasing/transferring a home, who is responsible for the home insurance? The buyer or the seller?
Real estate sales are slow but of the 1500 people, I am willing to bet that some of the people had homes that were in the middle of being sold.
In the standard purchase contract (that is used by realtors and lawyers alike), there is a clause that states that the property and all items on the property will remain the risk of the seller until 12:01 am on the completion date. So, the seller should definitely insure the property until that time (at least).
After that time, the property and the included items will be at risk of the buyer (so the buyer needs to have insurance from then on).
Seems clear; but, in order to prevent any insurance “gaps”, the purchase contract should require the seller to insure the property up to the completion date (or until the sale has completed) and the buyer should arrange for insurance to run from the day BEFORE the completion date. This way, there is no doubt that the property is insured (should the unthinkable happen).
As well, it is important that the buyer purchase new home insurance and not just assume the seller’s home insurance. This is because the seller could have done something or misrepresented themselves in such a way that would cause the insurer to refuse to pay (if something horrible happens).
Also keep in mind that some wrinkles may exist with the transfer. For instance, a situation may arise in which the buyer is given possession by the seller before the sale is completed. Or, alternatively, the seller may be allowed to stay in possession of the property after the sale completed. In such cases, the buyer and seller should consult with their insurance company to arrange tenancy insurance or whatever the case may be.
With all that said, let’s hope no one loses their home…
Photo: Contributed - Dylan Bulman
**The information contained in this column should not be treated by readers as legal advice and should not be relied on without detailed legal counsel being sought.
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