Question:
What happens if the Buyer’s insurance company wants a copy of the inspection report before they’ll confirm insurance coverage?
Answer:
It’s important to be aware that the relationship between an insured and the insurer is one of “uberrimae fides”, that means “utmost good faith”, and includes a full duty of disclosure.
Essentially, that means you are entering into an agreement with someone who is on the same side of the table as you, not the other side. So, the parallel here would be “agency”.
If you fail to disclose something that you should have disclosed, then the policy is void at the option of the insurer. If you suffer 5 heart attacks, fail to disclose them, then die of a heart attack, you won’t be covered. If you do disclose, then, the insurer can either refuse coverage or increase the premiums. Property insurance is the same.
You will appreciate that many insurers are reluctant to ask too many questions, because if you failed to disclose something that you had a legal obligation to disclose, then, they could void the policy. They don’t have to make any real investigation until there is a claim. So, that could be 15 or 20 years out, and in the meantime they simply sit back and collect the premiums.
This means that if the insurance company asks for the Inspection Report, then, you will have to provide it.
Brian Madigan LL.B., Broker