# fire insurance.



## abroad (Feb 26, 2013)

Bought a property, and at the laywers office they told us that we need a fire insurance, even when we don't have a mortgage, who's wrong or right ?


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## Retired Peasant (Apr 22, 2013)

Fire insurance has nothing to do with a mortgage. A house could burn down whether there's a mortgage on it or not. It's up to you whether you want to risk losing everything in a fire, but even basic house insurance covers fire.

Perhaps the lawyer was talking about 'title insurance'. My understanding is that this is a one-time payment to insure against claims against your title to the property (and also claims that you infringed on a neighbour's property with your new shed). Again this has nothing to do with whether you have a mortgage or not. Again, like any insurance, it is up to you whether you want to use insurance to manage this risk.

My personal opinion is, yes you should have fire insurance, and the payment for title insurance was so small, that we felt it was worth it. YMMV.


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## OhGreatGuru (May 24, 2009)

Retired Peasant said:


> Fire insurance has nothing to do with a mortgage. .... .


Not true. The mortgage company I had on my previous house required proof, annually, that I had a valid insurance policy on the house.

Perhaps you misunderstood his use of the word "need". You would be foolish not to have fire & liability insurance on your biggest investment, so in that sense you "need" it, although it may not be "legally required".


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## abroad (Feb 26, 2013)

Thanks Retired Peasant and OhGreatGuru.

The house is in a not to good shape and it comes with some acres, the price for the property is in the acres not in the house. We want to take the house down and rebuild it.
Yes, we will take a title insurance.

We did not misunderstood the word ''need" , they told us that the laywer would not sign the papers.

We are new in Canada, and so far we only rented some houses. We were planning to take a look at insurance in the coming week.
But we are still not sure if we would take a fire insurance on a house like that.


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## MoreMiles (Apr 20, 2011)

OhGreatGuru said:


> Not true. The mortgage company I had on my previous house required proof, annually, that I had a valid insurance policy on the house.
> 
> Perhaps you misunderstood his use of the word "need". You would be foolish not to have fire & liability insurance on your biggest investment, so in that sense you "need" it, although it may not be "legally required".


Even if you do not care about your house, you would still want to protect yourself against the liability of fire spreading to neighbors. Imagine your house started a fire, burned down 3 adjacent houses, leading to $5 million damage. Without any insurance, you will be majorly screwed when your neighbors or insurance companies sue you to compensate for their loss.

It's like a car insurance, even if you do not care about your old car's collision coverage, you should still cover your liability for causing other people's damage.


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## Jungle (Feb 17, 2010)

And liability from injury and being sued.


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## AltaRed (Jun 8, 2009)

Absolutely have at least liability insurance in the event someone gets hurt on your property and/or your property causes damage to others adjacent to your property. I owned raw land for some time and always had $1-2 million liability coverage.

This is no different than having tenant's coverage when renting a property. Even if one's own possessions are not worth insuring, someone getting hurt in your unit, or water or or fire damage in your unit causing damage to adjacent units could bankrupt oneself.

Such insurance is dirt cheap.


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## My Own Advisor (Sep 24, 2012)

Liability coverage is essential.


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## abroad (Feb 26, 2013)

Ok Thanks

You confinced me, I was wrong, I need to have a fire insurance.
But isn't it the liability insurance that covers accidents when they are putting out a house on fire.

The laywer did not ask us if we had a liability insurance, I'm guesing that's still to come, other wise it wouldn't make sence.


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## MoneyGal (Apr 24, 2009)

Finally looked at this thread. You need fire insurance because there is a delay, of up to two weeks, between when the purchase is made and the proceeds are transferred to the former owner. You need fire insurance to cover that period. Now you say that you plan to take down the building, so in theory you "don't care" if the building burns down in the period after you've purchased but before the proceeds are in the hands of the seller - normally, this is not the case. 

Once you own the property and the seller has the proceeds, in the absence of a mortgage you can cancel the fire insurance coverage. No one is going to ask for it and no one cares if you have it (although fire insurance is usually recommended for all the reasons given in this thread).


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## MoneyGal (Apr 24, 2009)

No one but you cares if you have liability insurance.


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## MoreMiles (Apr 20, 2011)

abroad said:


> We are new in Canada, and so far we only rented some houses. We were planning to take a look at insurance in the coming week. But we are still not sure if we would take a fire insurance on a house like that.


Welcome to Canada... we are located next to USA so many practices are very similar. I can tell you the personal injury lawyers here work as actively as the American ones, for no fee to the claimants until they win. Their fee is somewhere about 30-50% of settlement / award. They love to sue for $5 million in a personal injury case, from house fire, slip-and-fall on your doorstep, dog bite, unsafe stair banister, etc. After their lawsuit, they will settle for $1-2 million from their lawsuit, and split 50/50 with their client. Successful lawyers drive fancy cars here in Toronto as they easily win over 20 case per year.

So you do NOT wish to be on the receiving end (ie, defendant). It will be silly to save a few hundred bucks and get involved in a multi-million dollar lawsuit.


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