Insurance: Guide to home insurance in Canada

When the time comes to buy a house or rent an apartment, home insurance isn’t the most exciting thing on your mind! But it’s a necessary step to take before moving day. If you’re new to insurance, this guide to home insurance is for you! First, we explain why you should buy home insurance. Next, the type of insurance policy and coverage that’s right for you.

Home insurance is not legally required in Canada if your home is fully paid up. But you’ll need it to get a mortgage from a mortgage lender.

Although not compulsory, home insurance helps you sleep well at night, whether you own a home or rent. It protects your property and personal belongings against damage, loss, theft and vandalism. What’s more, if you have to leave your home temporarily following a covered loss, home insurance covers your living expenses. Finally, home insurance can also cover medical expenses if someone is injured while visiting your property.

In short, your home is much more than just a place to sleep. Rather, it’s a place where you live and where your most precious items are stored. So it’s very important to be protected against damage or loss.

As we mentioned earlier, you don’t just need insurance when you buy a single-family home. There are also other properties you should consider insuring, such as a rental building, condo, vacation home or cottage.

Here’s more information on each type of home insurance…

Homeowner’s insurance is a type of insurance for owners of detached houses, covering the building as well as detached structures such as sheds. Most homeowners opt for comprehensive coverage, as it offers the best protection for their home and personal belongings.

Tenant insurance is designed for people who rent an apartment, condo or house. It mainly protects your personal property, but also covers the medical expenses of visitors who are injured on the rented property. Tenant’s insurance does not cover damage to the building (the landlord is insured for this). But it does cover living expenses if you have to move temporarily to carry out repairs following an insured loss.

If you own a condominium, you’ll opt for condo insurance. Like home insurance, condo insurance protects your unit and your personal property. It also covers shared common areas such as the gym, roof, garage, etc. You’ll also be covered if you have to live elsewhere during maintenance or repair work on your building or condominium unit.

Do you have a vacation home or cottage? If this is the case, you’ll need to take out vacant home insurance. This type of policy requires you to choose your perils (or risks), as the risk of damage is higher since you’re not there all year round. Many insurance companies will list both your permanent and secondary residence on the same policy.

When you choose a home insurance policy, you get a number of coverages, including personal property and liability coverage. Personal property coverage protects you financially against loss or damage to your personal property and home. Liability coverage legally protects you from liability for losses caused by injuries to visitors to your home.

Once that’s settled, there are three types of home insurance policies to consider:

• Comprehensive home insurance
• Basic home insurance
• Extended home insurance

Here’s more information on each of them…

Standard protections include :

• Dwelling: Protection for the physical structure of your home, including foundations, walls, roof and detached structures (e.g. sheds, decks, etc.).
• Civil liability: Protection against possible legal action for accidental injury or property damage.
• Personal property: Protection of your personal effects (furniture, clothing, jewelry, electronics, works of art, etc.) in the event of theft, loss or damage caused by a covered loss.
• Additional living costs: Coverage for expenses incurred if you must temporarily leave your property due to a covered loss (e.g. hotel room, clothing, etc.).

Optional coverage includes :

• Water damage: Protection against water damage such as sewer backup, surface water and above-ground water.
• Identity theft: Protection against identity theft and fraud, covering legal costs.
• Earthquakes: Protection against damage caused by earthquakes.

For each of these insurance coverages, conditions and limits apply. For example, water damage coverage and insurance amounts. Check your home insurance contract with your current insurer, as well as with other insurance companies.