The Myplace Playbook // 070
Hey Everyone,
There’s a part of buying a house that doesn’t get talked about enough until it becomes a closing-week problem.
Insurance.
Not the rate. Not the down payment. Not the inspection. Home insurance.
It feels routine, so most people don’t think about it early. Then closing gets close, the lender asks for proof, and suddenly the whole deal depends on something that should have been handled days or weeks earlier.
This time of year, especially in the Kootenays, it needs to be part of the conversation before the offer is written.
The first thing to know is simple:You can’t close a mortgage without home insurance in place.
That’s not a Myplace rule. That’s not a lender being difficult. Every lender requires proof of insurance before they release mortgage funds.
No insurance, no money. No money, no deal.
For most of the year, this is a non-event. You call a broker, get the policy arranged, and move on.
But it’s the middle of June. The hills are dry, the forecast is hot, and the province has already warned this could be a difficult fire season. Officials have said drought conditions are worse than they were heading into 2017 and 2018, two of the worst fire years BC has seen. There are already hundreds of fires burning across the province, and July hasn’t even started.
West Kelowna, the very same fire ravaged West Kelowna from a few years ago has already had an uncontrolled fire this season
In that kind of summer, insurance is not just a passing thought. It is part of the deal strategy.
One of the biggest mistakes buyers make is confusing a quote with a bound policy.
A quote is only a price. It tells you what coverage may cost.
A bound policy is coverage. It means the insurer has agreed to put insurance in place on a specific date.
For a home purchase, that date needs to line up with your closing date. The moment the house becomes yours, it needs to be insured.
People get a quote, assume they’re done, and move on. Then closing week arrives and nothing is actually in force.
That’s where the trouble starts.
Wildfire adds another issue.
If there is an active, uncontained wildfire near the property, many insurers will not write a new policy. The common range is about 50 kilometres.
Not 50kms as the highway winds, 50 kms as the crow flies.
From the Clock Tower in downtown Cranbrook that could mean a fire:
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North of Skookumchuck
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In Fernie
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Baynes Lake
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Moyie/lumberton
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Kimberley…
You get the idea.
If there is an active fire within that area, a lot of companies will not bind coverage until the fire is out or under control.
Think about what that means in a Kootenay summer.
A fire can start 40 kilometres from a house that is not in immediate danger, and the insurance needed to close on that house can still get put on pause.
The house may be fine. The deal may not be.
**No insurance means the lender won’t fund. **If the lender won’t fund, you can’t complete. If you are already in a firm contract with a completion date, that can get stressful and expensive very quickly.
This is not rare in the BC Interior. It happens somewhere almost every summer. Most buyers only learn about it when they are already in the middle of it.
The fix is planning for it early.
Start the insurance process as soon as you have an accepted offer. Not the week of closing. Get a broker working on the file right away so the policy can be bound as early as possible. The earlier you start, the more options you have if fire conditions change.
Use a subject-to-insurance clause. Just like subject to financing or subject to inspection, your offer can be conditional on actually being able to get insurance. If coverage is not available, you are protected instead of trapped. Talk to your realtor about adding it.
Ask about the wildfire clause. BC’s real estate regulator created an optional wildfire clause for purchase contracts. It allows a one-time extension of up to 30 days if wildfire conditions prevent you from getting fire insurance. Thirty days is often enough time for a fire to be controlled and for insurers to start binding again. Your realtor can add this clause to the offer.
Ask about “stay on risk.” If closing lands during an active fire threat, the seller’s current insurer may be willing to temporarily reissue the existing policy in the buyer’s name so the deal can complete. It is not automatic, and not every insurer will do it, but it has saved deals. Many buyers do not know to ask.
None of this is complicated. It just has to happen before everyone is under pressure.
I’m bringing it up now because buyers writing offers in June are heading straight into the hottest, driest stretch of the year.
The buyers who get through summer without problems are not always lucky. In a lot of cases, someone saw the insurance issue coming and built the offer around it from the beginning.
That is the difference between working with someone who only talks about rate and someone who understands how a Kootenay summer can affect a mortgage closing.
The rate gets you the mortgage.
Planning gets you the keys.
If you are getting ready to write an offer this summer, bring me in before the offer goes in. A quick call can make sure the insurance piece is handled before it becomes the one thing standing between you and the house.
Hit reply and tell me what you are looking at. I’ll tell you what to watch for.
-Andrew
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