Insurance Requirements

Note: Generally once you obtain financing from a lender, they require you to have a valid insurance on your home to protect their security on the property in case of natural hazards. There are a few minimum requirements that have to be met in order for the insurance to be satisfactory to the lender (otherwise, even if your lawyer receives your mortgage funds from your lender, s/he is not authorized to use same). Here below are some general insurance requirements:

1. The name of "Insured" person(s) has to match that of the borrower(s) on the mortgage (e.g. if the two borrowers on the mortgage are John and Jane Doe, the Insurance needs to list John Doe and Jane Doe as Insured persons);
2. The effective date on the insurance has to be no later than the mortgage advance date;
3. The insurance amount (on the building) cannot be any less than the mortgage principal amount OR the insurance has to cover "Full Replacement Cost" or "Full Replacement Value";
4. The lender's full name and address has to be listed as a loss payee (if you're obtaining a 1st mortgage, then lender has to be the 1st loss payee, if 2nd then 2nd and so on). Please see below for a sample list of some lenders with their address as how they "may" want to appear on the insurance (see disclaimer above);
5. The insurance has to be subject to the Standard Mortgage Clause.