70,000 Marriott Bonvoy Points + 5X Points on Eligible Travel & Gas
home insurance in Canada

Everything you need to know about home insurance in Canada

To the point

You are looking to buy a new home insurance? Here's everything you need to know about home insurance in Canada.

So, you are considering purchasing home insurance? Like many Canadians, this subject can be confusing to navigate, but it shouldn’t be overlooked. According to the Insurance Bureau of Canada, property claims as a percentage of total claims have risen over the last decade.

Whether you are a landlord, first-time homebuyer, renter or interested in buying a home at some point, this article will break home insurance in Canada down for you. Don’t worry, we got you covered! We even have a comparison tool for you.

What is home insurance, and why do I need it?

For many of us, buying a home is the single most significant investment we will make in our lifetime. However, while owning a home has many perks, you also need to be prepared for unforeseen events that make it essential to be ready – that is where home insurance comes in.

Home insurance in Canada is just like any other form of insurance; over time, you are paying an insurance company payments to protect your asset in the likelihood an insurable event happens. Many people understand its function, but you may not know why you need it. Here are a few reasons why home insurance is necessary:

1. Cover emergencies

Sometimes, life happens. You are not really in control of certain events that occur to your home, and while home insurance in Canada is not mandatory, if you find yourself uninsured and hit with a costly event, you may be on the hook for thousands of dollars (yikes!).

To have better peace of mind and financial safety net, making payments, also known as premiums, may be worth it in the long run.

2. Home insurance protects more than just your house

When you purchase home insurance, you are protecting more than just the structure of your house. In many cases, coverage (which we will get into) includes replacing damaged or stolen valuables like your jewelry and garage tools and can even provide coverage for items found in your vehicle.

3. Requirement through mortgage insurance

When you seek a mortgage and have a down payment that is less than 20%, you will be required to show proof of insurance. The reasoning is simple – the lender, in this case, would like to protect their investment. Home insurance adds that added protection.

toronto gaeece

Home insurance policies and coverage

The amount of insurance coverage you need depends on several factors, including your location, the value of your home and contents, and geographical weather patterns. For example, purchasing additional coverage for earthquakes makes more sense if you are in California, whereas somewhere in Ontario or Quebec may not necessarily require that additional coverage.

Below will feature some of the most common insurance coverage types available to you.

Dwelling Coverage

Property or dwelling coverage covers damage or loss that you face to your home. This coverage may help rebuild or repair the physical structure of your home. Several events are covered in this case, known as insured perils.

This includes everything from:

  • Theft
  • Water damage
  • Wind
  • Explosion
  • Vandalism
  • Hail

This is a basic list of what is covered for most insurance policies. You should look at your homeowner’s policy to determine what you may or may not be covered for.

Contents coverage

This type of insurance helps replace or repair contents that have been lost or damaged by an insured peril. This coverage can also apply to items not attached to your home and, depending on your policy, can include things inside your garage or shed.

Personal Liability coverage

This type of coverage protects you against the event that something happens to someone while on your property.

For example, if someone were to get injured on your property, they could seek compensation for medical and legal expenses. While this does not apply to you or members of your household, personal liability coverage will help cover those costs up to its coverage limits.

Additional Living expenses coverage

If you cannot return to your home due to a covered loss, additional living expenses may be granted to you as laid out in your homeowner’s insurance policy.

An example of this could be that your home was flooded, leaving you and your family out of a house for some time. With additional living coverage, you would be covered for the cost of food and accommodation up to your policy limits.

Policy types

Home insurance policy types vary in terms of coverage from one insurer to another. To keep things simple, the top three you should consider include the following:

Comprehensive Basic Broad
Comprehensive policies cover both the dwelling and its contents against all covered risks. Therefore, unless your insurer expressly excludes a risk, you should be covered for it. 
Basic or standard policies are a less expensive option and should be considered to save some money on some risks. This policy only covers risks to your home and contents that are named in your policy. 
This is the right in-between plan as it covers all risks for your home except for exclusions while also covering all named risks for your content. 

Some honourable mentions include No-frills policies, which cover properties that don’t meet insurance standards. This is by far the cheapest option and offers very basic coverage. Overall, it would be best to speak to a licensed professional before deciding which coverage is right for you.

money gf

Endorsements: Do I need one?

An endorsement or rider is an optional add-on to your home insurance policy covering a specific item or insurable event outside your current coverage scope. Some examples of this could include:

  • Sewer back-up coverage
  • Increased Jewelry endorsement
  • Loss assessment coverage (condo specific)
  • Identity theft

Generally speaking, you may look to get an endorsement added to your policy if you have a treasured item or have growing needs for your business or home that need added protection. It all depends on your situation and current lifestyle.

Condo insurance

The overall structure of Condos makes it a unique situation compared to single-family homeowners’ insurance.

Condos are set up as a cooperative unit, meaning many people share the amenities and shared space. Usually, a condo will have a condo corporation that offers insurance to cover things like the structure of the building and common areas. In other cases, however, this idea of shared responsibility does not apply.

Condo insurance will cover things like your condo’s contents and personal liability.

montreal gcc

Tenants’ insurance

If you rent an apartment or home, you may consider purchasing tenants’ or renters’ insurance. Many tenants make the mistake of assuming that renting is responsibility-free when in reality, your landlord’s insurance will not cover things like your contents. While you don’t have the landlord’s responsibility for the structure of the building, this insurance may come in handy if you are looking to protect your personal belongings. Some other areas of coverage for renters’ insurance may include:

  • Accidental damage to the building you are renting
  • Additional living expenses if your residence is uninhabitable
  • Personal liability

Renters insurance is a great affordable option to consider if you are looking to rent a home. Speak to an insurance advisor to determine the plan that will suit your needs best.

How are premiums calculated?

As mentioned earlier, several risk factors go into determining the number of premiums you will be paying each month. Insurers will take these factors and determine the likelihood of you making a claim.

Let’s look at a couple of the different factors:

Location

Where you live can make a difference in the amount of premiums you will end up paying.

Insurance companies will usually track claims made in your area and use these past experiences to guide the chances of a claim occurring.

Age of structure

Generally speaking, the older a building is, the more risk is attached. With time, things begin to break down, and as a result, an older home may be quoted more than a newer home as it is much more of a liability to insure.

Fire protection

Your proximity to a fire hydrant can determine how much you will pay into premiums. The closer you are to water, the better the chance is to save your property from fire risks.

This is usually not a concern for urban properties but can be important for rural areas.

Claims history

Premiums tend to go up in cases where you have made multiple claims. From the point of view of the insurer, this is an indicator for future claims.

real estate gbfad

Tips for filing an insurance claim

Filing a claim can be a stressful situation, especially if you have damage to your property. Here are some helpful tips to make the process easier on your end:

  • Call your insurance company as soon as possible and report your claim
  • Provide as much detail as possible to your claims adjuster on the reported damage or items stolen
  • Always discuss your policy’s coverage limits and deductible (the amount you pay when you make a claim), so you can be best informed on your coverage
  • Keep all receipts for additional living expenses if you need to leave your house for an extended period
  • Take photos and documentation of all the damage before the work starts

While service standards vary from company to company and the extent of the damage, you should keep these tips in mind when filing your next claim.

Buyer beware: When you aren’t covered

Standard home insurance in Canada won’t cover you in all situations. These are known as exclusions. In some cases, these exclusions may require additional coverage, like flood and sewer backup, but others are a full-stop exclusion, and most insurance companies will not cover a claim if these are found.

1. Damage caused by vermin and insects

If insects or animals have damaged your property, you will be on the hook for the costs to repair. Home insurance does not cover damage by animals or insects.

To help prevent this, you can look into plugging any openings to prevent them from entering or damaging your home.

2. Poor maintenance

When you do not maintain your home for an extended period, your policy most likely will not cover this if an insurable event were to happen.

Things like mould, wear and tear and general neglect to your home are not viewed favourably in the eyes of your insurer and will likely result in a denied claim.

3. Faulty workmanship

If an area of your home was poorly installed or had a defect, this usually won’t be covered by your insurance company. This point is crucial, especially when working with contractors to do any renovations or repairs.

You want to make sure that they are licensed and qualified before doing any work on your home.

How to find cheap insurance options

With rising insurance costs, finding affordable home insurance options over a long period can be done with some research and best practices.

To get the lowest premiums, you can compare home insurance in Canada. And here are a few things you can do:

Bundle when you can

Bundling your home and car insurance could be a viable option for you to save some money on insurance. Insurance options will provide incentives to their customers, and bundling is a great way to bring in additional revenue.

It is best to shop around before you make this purchase, but if it sticks, you could save a decent amount on your home insurance if you bundle.

Always maintain your home

When you maintain your home, you put yourself in the best position to pay less in insurance over time. While there are some events outside of your control, regular maintenance can be a game-changer long-term.

Increase your deductible

Increasing your deductible is another excellent way to ensure that you pay less in premiums. While you will have a greater share of the payments on the back end, if you are maintaining your home, the likelihood of filing a claim will reduce and have you paying less in premiums.

It is always good to shop around as much as possible to find the best deal for home insurance in Canada. You never know when you might find a steal!

Pay your home insurance with a credit card

With some home insurance companies in Canada, you can pay for your insurance with a credit card. That way, you’ll earn some points or unlock a juicy welcome bonus!

Conclusion

There you have it! This guide should serve as a foundational tool for you and your home insurance journey in Canada. For a more detailed look into policy coverages, deductibles and more, you will have to speak to a licensed professional of your choosing. But first, you should compare home insurance in Canada with our tool!

Let us know what you think in our Facebook Group! Are there any other home insurance topics you would like covered?

Suggested Reading