Humber/Ontario Real Estate Course 4 Exam Practice

What should a buyer do about insurance for a remote cottage?

1. Insurance is not available for remote, older properties.

2. Confirm insurance availability and cost with the seller.

3. Include a condition regarding securing insurance in the offer.

4. Assume insurance for such properties is easily obtained.

5. Automatically qualify for insurance when purchasing.

6. Verify the property's previous insurance policy.

The correct answer is: Include a condition regarding securing insurance in the offer.

Including a condition regarding securing insurance in the offer is a prudent approach for many reasons. Remote cottages, particularly those that are older or located in less accessible areas, may face unique challenges when it comes to obtaining insurance. By incorporating this condition into the offer, the buyer protects themselves by ensuring that they have the ability to secure adequate insurance before finalizing the purchase. This strategy allows the buyer to investigate the market for insurance options specifically tailored to the property in question. If insurance proves to be unavailable or prohibitively expensive, this condition would allow the buyer the option to back out of the purchase without penalty, thus safeguarding their financial interests and ensuring they are not left without coverage after acquiring the property. Additionally, while it is true that some might think insurance for such properties is easily obtainable, variations in risk factors can significantly impact availability and pricing. It would be unwise for a buyer to make assumptions without verifying the details first. Furthermore, merely confirming insurance availability and cost with the seller may not provide a complete picture of the risks associated with the property, as sellers may not have full disclosure on insurance challenges. Ultimately, making the offer contingent upon obtaining insurance not only reflects due diligence on the part of the buyer but also establishes a clear process to address potential issues