Do I need home insurance before closing?
Do I need home insurance before closing? Here’s the blunt answer Milton sellers ignore — and why it costs them.
Quick, blunt answer
Yes. Sellers should keep home insurance active until possession and keys are officially transferred at closing. Buyers must have insurance in place effective on closing day. If either side skips this, you risk financial loss, liability exposure, and delays — especially in Milton, Ontario where winter weather and busy market timelines make mistakes costly.
Why this matters for home sellers in Milton, ON
You’re selling a home in Milton. Market moves fast. Closing day feels like a formality — until water damages your hardwood the day before possession, a stray guest injures themselves during a final walkthrough, or a break-in happens while the property’s vacated. That’s when insurance matters.
Ontario law and local closing practices mean ownership doesn’t transfer until legal documents are signed and funds move. Until then, you remain responsible. Canceling your policy early or leaving the house uninsured is a gamble you don’t want to take.
What usually happens on closing day (Milton specifics)
- Lawyers exchange funds and documents. The buyer’s mortgage lender often requires proof of insurance (an insurance binder) before funds are released.
- Keys and possession transfer at the agreed time. Until that minute, the seller legally owns the property.
- Adjustments for utilities, property taxes, and condo fees (if applicable) are settled.
In Milton’s market, delays happen. Buyers sometimes scramble to secure insurance. Lenders will block funds without proof. If you’re the seller and you’ve already canceled coverage, you’re exposed until the buyer’s insurance comes through or the closing is rescheduled.
Difference between homeowners insurance and title insurance — both matter
- Homeowners insurance: Covers physical damage (fire, wind, water), theft, and liability claims. This protects whoever owns the home until possession changes hands.
- Title insurance: Protects against title defects and legal title issues (fraud, unknown liens). It’s usually one-time and often purchased during closing.
Both play roles in reducing risk during a sale. Don’t confuse one for the other.
Top risks sellers face if they cancel insurance early
- Property damage between signing and possession (weather, vandalism, accidental damage).
- Liability claims during final showings or final walk-throughs.
- Loss of personal possessions left behind accidentally.
- Delays because the buyer’s lender won’t release funds without proof of their insurance — and you have no coverage during the gap.
- Higher cost: Reinstating a policy at short notice or covering a claim out-of-pocket is expensive.
Milton’s seasonal weather — heavy snow, freeze-thaw cycles, and spring water problems — elevates those risks.
Practical steps for Milton home sellers — a short, direct checklist
- Keep your homeowner’s policy active until your lawyer confirms funds and possession are transferred.
- Notify your insurer that the property is for sale, but don’t cancel. Ask about showing and vacant-home endorsements if the house will be empty.
- If you move out early, buy temporary vacant-home insurance or an extended coverage endorsement.
- Ask your lawyer to confirm the exact time of possession and the status of funds on closing day.
- Keep records: confirmation emails, policy numbers, and any endorsements. Save the buyer’s insurance binder if it’s provided to the lender.
- Secure the house before final walk-throughs — remove valuables, change lock codes if needed, and log final inventory.
- If you have tenant or lease arrangements, confirm responsibilities for insurance with your lawyer.
What if the buyer hasn’t secured insurance by closing?
Buyers typically must provide proof of homeowners insurance to their mortgage lender before funds are released. If the buyer fails to secure insurance:
- The lender may delay funding and closing.
- You remain on the hook for risks until the closing completes.
This is why keeping your policy active until the last minute is non-negotiable. Don’t rely on the buyer — protect your downside.
Special case: vacant property and moving early
Many sellers move out before closing. Empty homes attract different risks and many standard policies exclude long-term vacancy.
If you plan to vacate early:
- Tell your insurer and ask for a vacant-home endorsement.
- Limit vacancy time where possible. Some policies restrict coverage after 30–60 days.
- Arrange winterization (shut off water or ensure freeze protection) to avoid burst pipes — a common Ontario claim.
How to coordinate with your lawyer and realtor in Milton
- Tell your realtor and lawyer your move-out plan and timing.
- Ask the lawyer to verify that buyer’s mortgage instructions include proof of insurance to be delivered before funds release.
- Get clear written confirmation of the exact possession time.
A smooth closing is coordination. Do your part: keep insurance and confirm logistics.
Cost vs. risk — why keeping insurance is cheap protection
Homeowners insurance is a small daily cost compared to even a single claim. The math is obvious: a reinstated policy or a month of coverage is tiny compared to replacing flooring after water damage, paying for defense in a liability claim, or losing proceeds from a delayed closing.
Be smart: conserve proceeds from your sale by avoiding preventable hits.
Real-life scenarios Milton sellers see (short examples)
- Final walk-through: A buyer’s contractor trips and breaks a hip on a loose stair. Without liability coverage, the seller faces claims.
- Storm damage: An overnight windstorm blows off part of the roof after the seller moved out but before keys transferred.
- Vacant theft: A costly theft occurs in a vacant home left for a week before closing.
These aren’t hypotheticals. They happen in Milton and cost real money.
Final recommended play for Milton sellers
- Keep your homeowners policy active through closing and handover of keys.
- If vacating early, add vacant-home or showing endorsements.
- Coordinate with your lawyer to confirm possession time and funds release procedures.
- Document everything and secure the home for final walk-throughs.
If you want a one-page closing checklist tailored to Milton market realities — weather, buyer timelines, lender habits — I’ll send it. The right checklist prevents mistakes that cost tens of thousands.
About the local expert handling Milton closings and risk
If you’re selling in Milton, work with someone who knows the playbook, common slip-ups, and the local lender expectations. For a focused checklist and personal support through closing logistics, contact a local Realtor and closing advisor:
Tony Sousa — Milton Realtor and seller advocate
- Email: tony@sousasells.ca
- Phone: 416-477-2620
- Website: https://www.sousasells.ca
He handles local closings, coordinates with lawyers, and protects sellers from last-minute insurance headaches.
FAQ — Common questions from Milton home sellers
Q: Do I have to keep insurance until the sale funds clear?
A: Yes. Ownership usually transfers only when legal documents and funds are exchanged. Keep your insurance until your lawyer confirms the transfer and you’ve handed over keys.
Q: Can I cancel my policy on the day I move out?
A: Don’t. Cancelling before legal possession is transferred leaves you exposed. Coordinate cancellation with your lawyer after funds and title transfer.
Q: What if I move out before closing and the home is empty?
A: Buy a vacant-home endorsement or temporary vacant policy. Many standard policies exclude extended vacancy coverage.
Q: Does the buyer’s insurance protect me at all?
A: No. The buyer’s insurance covers the buyer once ownership transfers and their policy becomes effective. Until then, you need protection.
Q: Will a lender require proof of insurance?
A: Yes. Most Ontario lenders require buyers to provide an insurance binder showing coverage effective on closing day before releasing mortgage funds.
Q: Should I buy title insurance?
A: Title insurance protects against title defects and is recommended. It doesn’t replace homeowners insurance but adds a separate layer of protection.
Q: What if the buyer delays closing because of insurance issues?
A: Closing can be delayed. Keep your policy active to avoid being uninsured during any gap. Consult your lawyer about any contractual remedies for delays.
Q: Who pays if damage occurs after I move out but before closing?
A: Legally, the seller is usually responsible until possession transfers. That’s why keeping insurance until closing is essential.
Q: Any Milton-specific risks to consider?
A: Yes. Milton’s winter weather — freeze-thaw cycles, ice storms — and busy suburban market mean showings, open houses, and early move-outs happen often. These factors raise the importance of continuous insurance coverage.
Q: Can my insurer deny a claim if I knew the house was for sale?
A: Not simply for listing the home. However, if you left the home vacant without notifying your insurer (and your policy excludes vacancy), a claim could be denied. Always be transparent with your insurer.
If you want a short, local closing checklist and a quick review of your insurance timeline for your Milton sale, reach out. We’ll keep the closing simple, fast, and protected.
Contact Tony Sousa at tony@sousasells.ca or call 416-477-2620 to get a tailored seller protection plan for your Milton property.
