Closing on a house is exciting, but there’s a lot to keep track of before you get the keys. One thing you don’t want to forget? Home insurance.
Often overlooked among the other tasks on your to-do list, securing home insurance before your move-in date is not only important, but necessary. Homeowners with a mortgage are required to purchase home insurance and provide evidence of coverage to their bank or lender.
So, how soon before closing should you get homeowners insurance? Let’s walk through a recommended timeline, what lenders check before closing, and how YouSet can help simplify the process.
✅ 30 days before closing: Start shopping around
A month before closing on a house is the perfect timeframe to shop for home insurance. Your mortgage provider may ask for specific coverages or limits, so starting early gives you enough time to make sure you understand your lender’s requirements.
It also gives you time to compare quotes from at least three different insurance providers. If you’re looking for cheaper home insurance or are not sure what to look for, using a licensed insurance broker (like YouSet!) can help. In minutes, YouSet’s algorithms automatically compare multiple insurers and find all the exclusive discounts you’re eligible for, so that you end up with the best price possible.
✅ 2 weeks before closing: Buy a policy
It usually takes up to two business days to finalize home insurance, and even then, there are things that can happen that delay it further. Given that, plan to buy homeowners insurance at least two weeks before closing on a house. This will give your insurance provider ample time to issue the policy and make sure that everything is ready for your lender.
✅ 1 week before closing: Provide proof of coverage to your lender
You’re expected to send proof of home insurance to your lender at least one week before closing on your house; otherwise, your mortgage funds could be delayed.
The easiest way to do this is by sharing your declarations page, which is typically the first page in the multi-page document sent to you by your insurance providers in the hours or days after you purchased the policy. This page typically includes everything your lender will need to approve your mortgage: your name, address, coverage start date, and policy details.
While you’re at it, confirm that the policy’s “effective” or “start” date is the day of or before your closing day. This is your chance to double-check that all the information is accurate, and if it’s not, to get it fixed right away.
✅ On closing day: Final verification
The last step in this process will be a final check on closing day to confirm that your home insurance policy is active. Even if your documents have already been submitted, it’s always a good idea to bring a print copy of your insurance policy with you.
Keep your insurance provider’s contact information on hand, too, just in case your lawyer or notary needs to confirm details. Being “overly” prepared may save you a headache on closing day.
5 questions homebuyers have about closing and insurance
If you still have questions about home insurance, here are five quick answers to the most common questions from homebuyers.
Do you need insurance to close on a house?
Yes, if you are using a mortgage to buy your home, then you will need homeowners’ insurance to close. Most Canadian mortgage lenders require proof of homeowners’ insurance before they will finalize your loan.
How soon before closing should you get homeowners insurance?
It is recommended that you get homeowners insurance at least two weeks before closing, just in case there are issues with your application or unique property details to work out. This will help you avoid unnecessary stress or delays during an already stressful time.
What do lenders check before closing on a house?
Before closing, your lender will review and confirm the following:
- Your homeowners insurance policy
- Your credit report
- Your employment and income
- The appraisal report
- The property title
- The down payment and closing funds
Why do mortgage companies require homeowners insurance?
Insurance for homeowners protects everyone involved. It ensures that if your property is damaged or destroyed, the mortgage company will not lose the money they loaned you.
What happens if you don’t have home insurance on closing day?
If closing day arrives and you don’t have proof of an active insurance policy for the property, your funds may not be released, thus delaying the closing and potentially resulting in lender penalties.
Next steps
Always remember to plan ahead, because sorting out your home insurance early is crucial to avoid delays on closing day. With YouSet, it takes just minutes to get homeowners’ insurance.
In fact, you can get a quote in under 4 minutes and finish your entire application online. Even better, YouSet automatically compares rates from top Canadian insurers, like Intact, Economical, Promutuel, Travelers, L’Unique, and Wawanesa, to find you the best deal. We’ll even re-shop for you at renewal, if needed, to keep your price low year after year.
