What is homeowner's insurance in Canada?

Insurance What is homeowner’s insurance in Canada?

To the point Homeowner's insurance differs from landlord's insurance. In this article, we explain these differences as well as the different levels of coverage.

Whether you own a house, a condo, a cottage or a rental property you live in, homeowner’s insurance helps protect your property and personal belongings against the damages and insured loss. In this article, we explain what homeowner’s insurance is, as well as the different levels of coverage, the differences with home insurance, and the tools to compare home insurance policies.

What is homeowner's insurance?

Home insurance is not legally required in Canada. However, mortgage lenders require it for properties that are not fully paid up. That said, homeowner’s insurance is essential to protect your property, personal belongings and potential liability claims.

Homeowner insurance covers homeowners with or without a mortgage, condo owners, cottage owners and owners of rental properties (which they live in).

What's the difference between homeowner's and landlord's insurance?

Landlord insurance differs from homeowner insurance. Of course, the choice between the two types of insurance depends on whether or not you occupy the property. However, the coverages also differ.

Here are the main differences:

Landlord’s insurance: Landlord’s insurance is sometimes called non-occupant owner insurance. It protects a rental property that you do not live in. The coverage includes loss of rental income due to an insured event, damage to the building, in addition to the protections found in standard home insurance.
Homeowner’s insurance: Insurance for homeowners is simply called home insurance. It protects homeowners, condo and rental property you live in, against theft and claims. It covers property, personal belongings and civil liability. This is the insurance we explain in this article.

What is covered by homeowner's insurance?

Owner-occupied insurance policies in Canada are quite comprehensive. They cover the items below, but you can also add additional protections.

Standard protections include :

Dwelling: Protection of the physical structure of your property, including foundations, walls, roof and detached structures (e.g. deck, shed, etc.).
Personal belongings: Protection against loss or damage to your personal effects (furniture, clothing, jewelry, electronics, art, etc.) due to covered risks.
Civil liability: Protection against possible legal action for accidental injury or property damage.
Living expenses : Financial protection for expenses incurred if you have to leave your property temporarily due to a loss (e.g., hotel accommodation).

Optional coverage includes :

Water damage: Protection against water-related damages, such as sewer backups (e.g., sewer and septic systems), surface water (e.g., rain and snowmelt), above-ground water (e.g., leaks through the roof, doors, and windows), and water leaks.
Identity theft: Protection against identity theft and fraud, covering legal fees and the restoration of your identity.
Earthquakes: Protection against damage caused by seismic activity.

For each of these coverages, conditions and limits apply. For example, the types of damage covered and the amounts insured. Check with your insurer.

What are the different types of insurance and their levels of protection?

There are three types of home insurance, and they differ in their level of protection:

Basic home insurance: Protection limited to the risks covered by your insurance policy. It’s affordable, but it doesn’t cover all damage.
Comprehensive home insurance (all risks): The broadest coverage, including fire, theft, vandalism, natural disasters and civil liability. It’s more expensive, but offers optimum protection for your home and personal belongings.
Extended home insurance: Compromise between basic and comprehensive coverage. It is not as comprehensive as full home insurance, but it offers relatively broad protection at an affordable price.

If necessary, don’t hesitate to talk to an insurance agent or a property and casualty insurance broker like ClicAssure.

What influences homeowner insurance premiums?

Several factors influence the cost of owner-occupied insurance premiums in Canada, including:

Type of property (house, condo, etc.)
Type of coverage (basic, extended, comprehensive)
Amount of insurance and deductible
Location of your home
Value of your home
Value of your personal belongings
Insurance claim history
Types of damage and claims covered
Additional insurance coverage
Limits and conditions of your insurance policy

How can you reduce your homeowner's insurance premiums?

Admittedly, owner-occupier insurance premiums vary from person to person, as they depend on several factors. But you can save money and pay less for your home insurance with the following tips:

Bundle your insurance policies: when you bundle your home insurance with your car insurance on the same policy, you can save. For example, you can save up to 15% when you combine your car and home insurance with our partner ClicAssure.
Increase your insurance deductible: you can reduce your insurance premium when you increase your insurance deductible.
Maintain your home: when your home is well maintained, you can save money. Some events are beyond your control, but regular maintenance can reduce your insurance costs. For example, annual maintenance costs generally represent 3-5% of your home’s value.
Compare home insurance premiums online: you can use our home insurance comparator to get several homeowner’s insurance quotes.
Pay your insurance premium in one lump sum: when you pay your home insurance premium for the year in one lump sum, many insurance companies offer a discount. What’s more, you could even unlock credit card sign-up bonuses.
Maintain a good credit score: a good credit score confirms to the insurer that you are able to pay your premium on time. If so, authorize your insurer to run a credit check, which will save you money.

How do I take out homeowner's insurance?

Before purchasing homeowner’s insurance or renewing your current policy, compare several quotes. Check the conditions, exclusions and coverage in the event of damage for each insurance company. To make this task easier, use our online comparator to compare home insurance quotes based on your specific needs.

That said, insurance is a complicated business. So don’t hesitate to ask a professional for advice. For example, you can contact a damage insurance broker like ClicAssure. They have access to several insurance companies and exclusive discounts. Hence, they can then present you with the best offer available on the market. On the other hand, an insurance agent only has access to the products of the insurance company they work for.

Bottom Line

In short, homeowner’s insurance protects your property and personal belongings against unforeseen events and claims. Although it is not legally required in Canada, home insurance is, in our opinion, essential for owners of houses, condos, cottages, and rental properties.

Finally, try our home insurance comparison tool to find the best policy for your needs.

Frequently asked questions about homeowner's insurance

What type of insurance should I choose as a homeowner?

If you live in the property or one of its units (owner-occupier), you must choose home insurance. On the other hand, if you don’t live in the property (non-occupant owner), you must choose landlord’s insurance.

Is home insurance mandatory in Quebec?

Home insurance is not legally required in Quebec or elsewhere in Canada. However, mortgage lenders require it for properties that are not fully paid up. That said, homeowners insurance and tenants insurance is essential to protect your personal belongings and your civil liability.

Why take out homeowner's insurance?

Buying a home is usually the biggest investment of your life. However, to protect your home and personal belongings in the event of a claim, you need home insurance. Additionally, if you are a non-owner-occupied property owner, landlord insurance also covers the loss of rental income following an insured event.

Should you buy tenants insurance or homeowners insurance?

The choice of home insurance differs if you rent or own a property. Tenants must choose tenant’s insurance, while owners must choose between homeowner’s insurance, condo insurance or landlord’s insurance (if they don’t live in the rental property).

Who isn't required to insure their home?

Owners of fully paid-up homes are not legally required to buy home insurance.

Come to discuss that topic in our Facebook Group!

Vincent Morin

Vincent achieved financial independence and took early retirement (FIRE) at the age of 35. After a career in financial technology with a major American investment bank, he founded Retraite101, a personal finance website that reaches over 350,000 unique visitors annually and has more than 40,000 social media followers. Passionate about finance, reading, cycling, hiking, and travel, he continues to write for several Quebec media outlets to inspire and motivate those who want to take control of their finances.

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