How do I set up home insurance before closing?
“How do I set up home insurance before closing?” — Do this now so your lender funds your purchase and your move day isn’t a disaster.
Quick answer up front
Set up a homeowners insurance policy or get an insurance binder (proof of coverage) that names your mortgage lender, with the effective date set to your closing date. Do this at least 3–7 days before closing. Confirm the binder meets lender requirements and give a copy to your lawyer or closing agent.
Why this matters — plain and direct
Your lender won’t fund the mortgage without proof the property is insured. Your closing lawyer or notary will ask for the insurance proof at or before closing. If you wait until closing day, you risk a funding delay or costly last-minute coverage that doesn’t properly protect you. Milton’s weather, older homes in heritage pockets, and occasional basement flooding risk mean you should choose coverage intentionally—not hastily.
Step-by-step checklist to set up home insurance before closing (Milton-focused)
- Collect the essentials now
- Purchase agreement with closing date
- Property address and MLS number
- Mortgage lender’s name and contact
- Seller/occupancy info (vacant properties need special handling)
- Start shopping 1–2 weeks before closing
- Get quotes from at least 2 brokers or insurers. Use a local Milton broker when possible. They know area risks (basement flooding, older roof issues near the escarpment).
- Compare dwelling coverage (replacement cost), liability, deductible, and key endorsements.
- Confirm lender requirements
- Most lenders require replacement cost coverage equal to the rebuild cost, not the purchase price.
- Lenders want to be named on the policy as “mortgagee” or “loss payee.” Provide their exact wording.
- Choose endorsements that matter in Milton
- Sewer backup / water backup endorsement — strongly recommended for Milton basements.
- Overland water / flood endorsement — standard policies don’t cover flood. Ask if your neighborhood has flood risk.
- Sewer line/septic endorsement for older properties.
- Legal liability and increased contents coverage if you have valuable items.
- Get the binder and set the effective date
- Once you agree, request an insurance binder or policy declaration page.
- Set the effective date to your closing date and time (or earlier if you want coverage while moving).
- Ensure the binder names your mortgage lender and includes coverage amounts.
- Send proof to your lawyer and lender immediately
- Email the binder or declaration page to your closing lawyer/notary and to the lender.
- Save a copy for yourself and print a backup for moving day.
- Finalize full policy after closing
- The binder converts to a full policy. Review your policy documents and adjust if needed.
Real Milton examples you’ll recognize
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New build in a new Milton subdivision: Builder warranties don’t replace homeowners insurance. Lenders still demand a binder. For new builds, include loss of rent/additional living expense coverage only if you plan to rent out rooms.
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Century home near the escarpment: Older roofs and knob-and-tube wiring can raise premiums. Ask your broker about retroactive coverage requirements and inspection clauses. A local Milton broker can often find underwriters who will write policies for heritage homes with reasonable terms.
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Condo purchase near Derry Road: Condos rely on condo corporation insurance for common elements. You still need individual condominium unit owner coverage for the interior, betterments, and personal property. Confirm with the condo board what the declaration covers so you don’t duplicate or miss coverage.
Timeline — what to do and when
- 14–30 days before closing: Start contacting brokers/insurers; gather documents.
- 7–10 days before: Compare quotes and select coverage.
- 3–5 days before: Secure binder, set effective date, send to lawyer and lender.
- Closing day: Lawyer confirms insurance, lender releases funds, you get keys.
If anything changes (closing date moved), update the binder immediately.
Common lender requirements in Ontario (what your bank will check)
- Policy in effect on closing date
- Replacement cost value at least equal to rebuild cost
- Lender named as mortgagee or loss payee
- Proof of sewer backup or other endorsements if required by lender
Different lenders have slight variations. Mortgage brokers and local insurers in Milton know the typical requirements for big banks vs. credit unions vs. private lenders.
Money-saving tactics that don’t cut corners
- Bundle home and auto with one insurer for multi-policy discount.
- Raise your deductible to lower premium — but keep it affordable for you.
- Get a home inspection before closing if possible. Repairs or updates (roof, furnace, electrical) can lower premiums.
- Ask about discounts for security systems, smoke/CO alarms, and newer heating systems.
- Compare broker vs. direct insurer quotes. Brokers can sometimes access better rates for local risks.
Special considerations for rental or vacant properties
- If you’re buying an investment property in Milton, you need a landlord policy or endorsement. A homeowner policy won’t cover rental risks.
- Vacant properties often require special vacancy insurance. If the home will be empty between closing and move-in, ensure the binder reflects vacancy status to avoid claim denials.
Moving day coverage — don’t leave this to chance
Set the policy effective date at least the day before you move if you plan to store items at the property or move in early. Many claims happen on moving day (damage to structure, theft). A policy active at move-in covers you from day one.
Local risks in Milton to consider
- Basement flooding and sewer backups — common in older neighbourhoods and low-lying areas.
- Winter storm damage and ice damming during Ontario winters.
- Older homes with non-updated wiring or plumbing.
- Proximity to the Niagara Escarpment can mean different microclimates; local insurers know this.
Using a Milton broker or local insurer gives you an edge because they know which neighborhoods have higher water risk and which carriers will offer better terms.
Mistakes that cause closing delays (avoid these)
- Waiting until closing day to request proof of insurance.
- Buying the cheapest policy without confirming lender wording or replacement cost.
- Forgetting to name the lender on the binder.
- Assuming condo coverage covers your unit’s interior — check the condo declaration.
How your realtor helps (and what to expect)
Your realtor should: provide the purchase agreement details to your insurer, recommend trusted local brokers, and remind you to get the binder early. In Milton, a local realtor can also warn you about neighborhood-specific risks insurers will flag.
If you’d like a referral to trusted Milton brokers who know lender requirements and local risks, contact the local realtor below.
Final checklist before closing in Milton
- [ ] Get at least two quotes from local brokers or insurers
- [ ] Confirm lender wording and replacement cost requirement
- [ ] Secure an insurance binder with effective date on closing
- [ ] Email binder to lawyer/notary and lender
- [ ] Update binder if closing date changes
- [ ] Check endorsements for sewer backup, overland water, vacancy
Frequently Asked Questions (FAQ)
What’s an insurance binder and is it enough for closing?
A: A binder is temporary proof that coverage is in place until the full policy issues. Lenders accept binders if they list the lender and coverage amounts. Always get a binder if the full policy isn’t ready before closing.
Do I need flood insurance for a Milton home?
A: Standard home insurance in Ontario generally excludes river or surface flood. If your home is in a flood-prone area or has past water issues, ask for an overland water or flood endorsement. Local brokers can point to municipal flood maps and past claim trends.
Can I set the policy to start on closing day?
A: Yes. Set the effective date to your closing date. If you move items in earlier, set it earlier. Confirm the binder shows the correct time zone and time if necessary.
Who pays for home insurance at closing?
A: You pay the premium. Some buyers may prepay a portion or the first year at closing. The mortgage lender only requires proof of coverage; they don’t pay your premium.
What if the seller’s insurance is cancelled before closing?
A: If the property becomes uninsured because the seller cancels coverage, notify your lawyer immediately. You must secure your own binder before the lender will fund.
Can my insurance start before I own the home for moving-day protection?
A: Yes. Many buyers set the policy effective date one day earlier to cover moving-day risks.
Want local help in Milton? Contact Tony Sousa — local realtor who helps buyers navigate closing, insurance, and moving logistics. Email: tony@sousasells.ca | Call: 416-477-2620 | https://www.sousasells.ca
If you want a referral to trusted Milton insurance brokers or a quick review of your binder before closing, reach out. I’ll point you to local pros who move fast and get lenders happy.
