Closing on a new home is exciting, but it comes with a long checklist before you can finally receive the keys. One critical step that homebuyers often overlook is securing home insurance. Not only is it important for protecting your investment, but it is also a mandatory requirement for anyone with a mortgage in Canada.
This guide explains exactly when to get homeowners’ insurance before closing, what lenders expect, and how to avoid last-minute issues that could delay your mortgage approval.
Why Home Insurance Is Required Before Closing
If you are purchasing with a mortgage, your lender will require proof of home insurance before releasing funds. This ensures the property is financially protected in case of fire, theft, or other covered risks. Without it, your closing could be delayed or canceled.
1 Month Before Closing: Begin Shopping Around
Start researching insurance options about 30 days before your closing date. This gives you time to compare quotes, check coverage levels, and confirm any requirements your mortgage provider may have. Using a certified insurance broker can save time since they compare multiple insurers and find exclusive discounts tailored to you.
2 Weeks Before Closing: Purchase Your Policy
It usually takes two business days to finalize a homeowners’ policy, but delays can occur. To be safe, purchase your insurance at least two weeks before closing. This ensures your policy is issued, processed, and ready for lender approval.
7 Days Before Closing: Provide Proof to Your Lender
Lenders generally require proof of home insurance at least a week before closing. You can send your insurance statement page—the first page of your policy documents—which includes key details like your name, address, coverage start date, and policy number.
Double-check that your coverage start date is on or before your closing date. If not, request corrections immediately to avoid last-minute issues.
On Closing Day: Final Confirmation
On closing day, bring a copy of your insurance policy to ensure all documents are in order. Keep your insurance provider’s contact details handy in case your lawyer or notary needs to confirm coverage.
Frequently Asked Questions
Do I need insurance to close on a house in Canada?
Yes. If you are financing your purchase with a mortgage, lenders require proof of home insurance before releasing funds.
How soon before closing should I get homeowners’ insurance?
Begin shopping about 30 days in advance, buy the policy two weeks before, and provide proof to your lender at least seven days before closing.
What documents are required as proof of insurance?
The insurance statement page is sufficient. It lists your coverage details, effective date, and policy number.
Why do lenders require proof of insurance?
It ensures the property is financially protected, reducing the lender’s risk in case of damage or loss.
What happens if I don’t have insurance on closing day?
Your lender may delay or cancel funding, which could postpone or jeopardize your home purchase.