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Real Estate – Homeowners Insurance Binder

homeowners insurance binder

  1. A document accompanying a homeowner’s insurance policy. Its sole purpose is to verify that the homeowner’s property is, in fact, properly insured.

When you purchase a home with mortgage financing, it is a standard requirement of your lender that you obtain home insurance. For example, here are the clauses from a standard RBC mortgage:


(1)You promise to maintain adequate insurance on your Property until the Outstanding Amount has been repaid in full.

(2)You promise, if we ask, to give us certified copies of the insurance policy and evidence of its renewal not less than 15 days before the policy expires.

(3)The insurance must be with a licensed insurance company and must be for the full replacement value of your Property in Canadian dollars. The insurance policy must contain mortgage clauses approved by The Insurance Bureau of Canada. These clauses must provide that loss proceeds are payable to us first, and that we have the first right to receive and to have a first lien on the loss proceeds. You must also assign your insurance policy to us.

(4)The insurance policy must protect against the following risks: fire, lightning, windstorm, hail, explosion, impact, vandalism, malicious acts, civil disturbance or riot, smoke and falling objects.http://www.rbcroyalbank.com/legalforms/download/3985(11-30-2005).pdf

Our instructions to home purchasers:

You are responsible for placing fire insurance on your new property. We suggest you contact your insurance agent soon. We recommend that the premises be insured for the full insurable replacement value, effective no later than the closing date or date of possession, whichever is the earlier. If you are obtaining a new mortgage loan, a certified copy of the policy will be required at least a week before the closing and failure to obtain this can delay your possession. If you are buying a condominium unit you should instruct your fire insurance agent to give you a policy to cover the replacement value of the contents. It is the responsibility of the condominium corporation to insure the structure.

Please contact us if you have any questions about home insurance binders.