Humber/Ontario Real Estate Course 4 Exam Practice

What must a buyer consider in regard to home insurance when purchasing a property?

1. Previous substantial insurance claims have no impact on premiums

2. Outdated systems may need replacement as a condition of the policy

3. Accepted unconditional offers automatically void if damage occurs before closing

4. Sellers' insurance will cover arbitrary removal of built-in fixtures

5. Future insurance claims must be planned for proactively

6. The buyer’s credit score will directly impact insurance costs

The correct answer is: Outdated systems may need replacement as a condition of the policy

When purchasing a property, it is crucial for a buyer to consider the implications of outdated systems on their home insurance policy. Many insurance providers may require that certain systems—like plumbing, electrical, and heating—are updated to meet current safety standards and regulations. If these systems are not sufficiently modernized, the insurer may insist that the buyer replace them before the policy can take effect, potentially delaying the purchase or resulting in additional expenses. By considering this factor, buyers can avoid unexpected costs and complications at the time of closing and ensure that their new home is insurable under standard terms. This understanding empowers buyers to proactively address any necessary updates before securing a mortgage or moving into the property.