Insurance Condition Ontario Real Estate: The Clause Buyers Skip

Last updated 11 September 2026. Written by Jatin Dua, Broker of Record at RE/MAX Quantum Realty, 799 The Queensway, Etobicoke · For Ontario registrants · 10 min read

No insurance means no funding, and you find out on day twenty-seven

The call comes late. The buyer’s lawyer needs a binder for the lender, the buyer has been declined by two carriers, and the third wants an electrical inspection before quoting. Closing is a week away. Nobody did anything wrong, exactly. They just never asked whether the house was insurable until the point where the answer had to be yes.

Insurance is a closing condition imposed by the lender whether or not anyone wrote it into the agreement. A buyer without coverage does not get funded, and a buyer who does not close is looking at a forfeited deposit and possibly more. The risk exists on every financed purchase in Ontario. The only question is whether it was priced in at offer stage or discovered at the end.

INSUR-1 and INSUR-2 answer different questions

INSUR-1 turns on whether the buyer can line up coverage they are willing to accept, and the buyer carries the cost of finding out. The test is subjective — the buyer’s own judgment governs, in their sole and absolute discretion. The seller has to co-operate on access, because an insurer may want to look at the property before quoting. The clause sits on the buyer’s side of the deal and can be waived.

INSUR-2 narrows the test. The condition is framed around insurance for stated named perils at an annual cost not exceeding a stated figure, excluding taxes. The same co-operation and waiver structure applies. What changes is the nature of the standard: instead of turning on whether the buyer is satisfied, it turns on whether coverage of a described scope is available below a described number.

That decides which one to use. A buyer who wants room takes INSUR-1. A listing agent looking at an offer with INSUR-1 in it should recognise how wide a satisfaction test is and consider countering to INSUR-2 with a realistic figure. A seller can live with a condition that fails only if insurance is genuinely expensive, and should be less comfortable with one that fails whenever the buyer says so.

On which point: Marshall v. Bernard Place Corp. (Ontario Court of Appeal, 2002) is an inspection case, but as reported it treats a discretionary condition as having both an objective and a subjective element, so sole discretion is not a free option to walk. A buyer who never applies for a quote and then declares themselves unsatisfied is exposed, and so is the agent who framed it that way. Whether that reasoning travels to an insurance condition is a question for the client’s lawyer.

What actually gets an Ontario house declined

This is field knowledge rather than law, and I want to be careful with it: underwriting is not regulated by anything I am qualified to interpret. What follows is what I see carriers doing, not a rule anybody publishes.

The recurring triggers are structural and they cluster in older housing stock. Knob-and-tube wiring. Aluminum branch wiring. Sixty-amp service. Fuse panels and certain recalled panel brands. An underground or interior fuel tank without documentation. Roof age past the point a carrier will write it. A claims history at the address, which follows the property rather than the owner. Uncertified woodstoves and secondary heat sources. Vacancy, and short-term rental use, both of which change the policy that is available.

Plumbing is its own category, and Kitec is the one every Ontario agent should be able to speak to. Stigma sits alongside it: remediated grow operations fall squarely in the territory RECO Bulletin 7.5 describes, where a non-physical attribute produces an entirely subjective response, and insurance availability is one concrete way that surfaces. A buyer’s agent should identify the concern early, and a seller’s agent should be working from written seller instructions.

Kitec: the correction most agents still have not heard

Kitec plumbing was installed between 1995 and 2007 and came off the market in 2005. A class action settled in 2011. Here is the part agents still get wrong, and it is the single most useful thing in this section: the claims deadline was 9 January 2020, and claims filed after it are rejected. There is no longer a claims avenue for a homeowner who discovers Kitec in their house today.

I still hear agents tell buyers there is a settlement fund. There was. It closed. If Kitec is present the buyer is looking at replacement cost, commonly quoted in the five to fifteen thousand dollar range, and at an insurance conversation – carriers refuse, surcharge or limit coverage, which is industry practice rather than a regulatory rule, but consistent enough to assume until told otherwise.

Two clauses address it directly. KIT-1 (Seller Warrants and Represents – No Kitec Plumbing on Property) is a seller warranty framed on their period of ownership and their knowledge, drafted to survive closing. KIT-2 (Buyer Acknowledges – Kitec Plumbing on Property) records that Kitec is present and the buyer accepts the property as is. Opposite positions, and they should never both appear in one schedule. More in the Kitec clauses post.

Timing: run it beside financing, not after it

Run the insurance enquiry in parallel with financing, from day one. A broker can usually say within a day or two whether a property will be straightforward, and where it will not be, that arrives while you still have conditions to work with. If an inspection is happening anyway under INSP-1 (Condition – Inspection of Property by a Home Inspector – General), the findings on wiring, panel, roof and heating are exactly what an insurance broker wants to see.

Keep the insurance condition short. A quote is fast work, so a long insurance condition asks a seller to hold the property for no operational reason. Where the property has features an underwriter will want to look at – an old tank, a woodstove, a property that has been sitting vacant – build the extra days in deliberately and tell the listing side why, rather than defaulting to a long period and letting them assume you are stalling.

Notice, waiver and the seller’s co-operation obligation

Both insurance clauses use the same mechanism as the rest of the conditional structure in Ontario agreements: written notice by the deadline, delivered to the seller personally or by another method the agreement permits, failing which the agreement ends and the deposit is returned. Both carry a buyer waiver right.

So the same discipline applies. In High Tower Homes Corp. v. Stevens, 2014 ONCA 911, as reported, a waiver delivered by fax where the agreement required personal delivery was ineffective. Read the notice provisions, including whatever a schedule did to them, on the day the offer is accepted. Deliver in the morning. Keep the acknowledgement.

Two documents, not one, and do not blur them. A notice of fulfilment says the buyer arranged the insurance. A waiver says they did not and are proceeding anyway. If the buyer has a verbal indication from a broker and nothing in writing, that is a waiver, and the buyer should be told so in those words before signing it.

The seller co-operation obligation is the part people skip. Both clauses contemplate the seller providing access where an inspection is needed to fulfil the condition. On the listing side, tell your seller when the offer is accepted that somebody may need to come through. On the buyer side, use it early rather than discovering on day four that a tenant will not admit anyone.

Where your licence ends

You are not an insurance broker. Telling a buyer that a property will be insurable, or that a surcharge will be modest, is an opinion outside your registration, and it is the kind of reassurance that gets repeated back to you later. Introduce the client to a broker and let the broker answer.

On disclosure, RECO Bulletin 7.4 is the framework. Patent defects need not be disclosed – caveat emptor – but actively concealing one removes that protection, and latent defects rendering a property unfit for habitation or dangerous must be disclosed. Where a seller’s agent knows of such a fact, they must disclose it to every interested buyer, use best efforts to obtain an acknowledgement from each, and give each a copy. Those duties come from case law, not the TRESA regulations.

And if the other side is self-represented, you cannot advise them on price, terms or clauses – including telling an unrepresented buyer they ought to add an insurance condition. Under Bulletin 2.4, confirm they intend to proceed unrepresented, deliver and explain the RECO Information Guide and the Information and Disclosure to Self-Represented Party form, state plainly that you act for your client and not them, and make reasonable efforts to obtain written acknowledgement.

Choosing between the two clauses

Pull the current wording of both from your own OREA member copy before you use either. I am describing what each clause does and how they differ, not what either one says.

How I want this handled

1. On the listing side, ask about insurance and claims history at intake, and get written seller instructions where anything sensitive surfaces.
2. On the buyer side, send the listing and any inspection findings to an insurance broker the day the offer is accepted.
3. Choose between INSUR-1 and INSUR-2 on purpose. If you are the listing agent looking at INSUR-1, consider countering with a figure.
4. Keep the condition short, and where you need longer, say why in writing.
5. Use the seller co-operation obligation early. Tenanted properties need more lead time, not less.
6. Where Kitec, an oil tank, knob-and-tube or a remediated grow operation is in play, treat insurance as a primary condition rather than a formality.
7. Send the correct instrument by a permitted method in the morning, and keep the acknowledgement.

The reason this condition is worth adding to your default thinking is that it fails safely. An insurance condition that turns out to be unnecessary costs a few days. An insurance problem discovered after conditions have gone costs a closing. The rest of this series is indexed at all articles.

Questions agents actually ask

Related reading

• Cleaning, Floors and Damage on Removal: The Maintenance Clauses Worth Adding
• Buying a Tenanted Property in Ontario: Rent Warranties, Notices and the Shortfall Adjustment
• Soil Test Conditions in Ontario: Drafting Access Before You Own the Land
• Access Clauses in an Ontario APS: Right-of-Way, Road Access and Water Access
• Dock and Boathouse Conditions in Ontario: Conservation Authorities and the Clause That Protects Your Buyer
• Every clause and condition guide in one place

This is professional commentary from a Broker of Record on drafting practice around insurance conditions in Ontario agreements of purchase and sale. It is not legal advice and it is not insurance advice. Coverage questions belong with a licensed insurance broker, and questions about disclosure duties, warranties and enforceability belong with the client’s lawyer. This is general professional commentary from a Broker of Record on drafting practice. It is not legal advice, it is not a substitute for your own brokerage’s policies, and it does not create any professional relationship. Clause codes refer to OREA’s Guidelines for Residential and Commercial Clauses, an OREA member resource — the clause wording itself is OREA’s and is not reproduced here. Always work from your brokerage’s approved forms, and send your client to a lawyer for anything turning on interpretation, enforceability or remedy. Legislation, regulator guidance and case law all change; verify anything you are relying on.