Humber/Ontario Real Estate Course 2 Exam Practice

Regarding home insurance during a property purchase, which statement is accurate?

1. A prior substantial claim won't affect the new premium

2. An outdated system may need replacing to get policy approval

3. Damage before closing nullifies the agreement

4. Buyer's previous claims have no impact on new insurance

5. The seller's insurance covers damages post-sale

6. The buyer is automatically covered by the seller's policy until closing

The correct answer is: An outdated system may need replacing to get policy approval

During a property purchase, it is important to note that an outdated system may indeed need to be replaced in order to gain approval for an insurance policy. This is because insurance companies may consider outdated systems to be high risk, potentially leading to denial of coverage or requiring the system to be updated before providing insurance. This statement holds true in the context of home insurance during a property purchase. While discussing the other options: A. A prior substantial claim can impact the new premium as past claims history is considered by insurance companies. C. Damage before closing typically does not nullify the agreement, as long as the terms of the sale contract are met. D. Buyers' previous claims can have an impact on new insurance, as insurance companies consider the claims history of the applicant. E. The seller's insurance generally covers the property until closing, but after the sale, the responsibility for insurance falls on the buyer. F. The buyer is usually not automatically covered by the seller's insurance policy until closing; buyers typically need to secure their own insurance once the property changes hands.