Home Insurance in Canada

Home insurance protects you from having to pay out-of-pocket to replace or repair your home and its contents from damage or theft.

It also protects you from liability claims made against you in the event of another person’s bodily injury or damage to property.

As the largest purchase most of us will ever make, we invest a lot of money into our homes and the contents within them.

If there is ever a fire, flood, or robbery, it would be extremely costly to repair the damages and replace the items.

What Does Home Insurance Cover?

Every home insurance policy is different.

Generally, you can expect your policy to cover the costs of repairing or rebuilding your home or replacing your belongings in the case of fire, smoke damage, theft, vandalism, damage from nature such as falling trees, ice storms, lightning, severe winds, and hail.

Policies can also cover the replacement of clothing, furniture, art, jewelry, and other belongings – this is an area where policies can differ significantly.

It’s important to discuss with your insurance provider to outline what belongings are covered.

Suppose you are considering buying a home shortly.

It’s essential for you to understand the different types of coverage options available.

Keep in mind, your mortgage company will require you to show proof of insurance to finalize funding for your home.

Did You Know?

Homeowner’s insurance isn’t just crucial for peace of mind, it’s required. Mortgage companies will require you to prove that the home is insured before they will release the funds you need to close the deal on your purchase.

Types of Home Insurance

There are 3 main types of home insurance:

1. Named Perils

A standard insurance policy offers you the minimum amount of coverage required by mortgage companies.

It offers the benefit of lower premiums or a cheaper policy, but it also offers a basic level of coverage.

These policies will only cover the items or events specifically listed in your policy documents.

If you choose basic coverage, be sure to review your contract carefully. 

2.Broad

A broad policy offers more extensive coverage than a basic policy, but it still does not offer as much coverage as a comprehensive policy.

These policies cover most risks to your home and belongings except any recorded as exceptions.

To keep premiums down, some people choose policies that do not cover the damages of certain high-risk events like flooding, and this would be listed as an exception in their policy documents. 

3. Comprehensive

A comprehensive home insurance policy offers the most amount of coverage to your home and its contents.

Generally, a comprehensive covers all risks, including the building and personal liability.

There are very few instances where items are excluded from a comprehensive policy coverage.

Did You Know?

Certain events such as earthquakes or tsunamis require additional insurance coverage.

Couple reviewing home insurance options with insurance broker

How are Home Insurance Premiums Calculated?

Like automobile insurance premiums, home insurance premiums are calculated based on the level of risk the insurer is taking on by protecting your home and possessions.

Many factors help the insurance companies assess this risk.

Some of these factors are:

  • Any previous insurance claims made on the home
  • Any history of water damage on the home and whether the home has a sump-pump or other flood protection
  • The size of the home and proximity to a fire hydrant and fire hall
  • The location of the home and any natural disasters that are common to that area
  • Crime rates in the area and any home security devices like monitored alarm systems and security camera
  • The age, construction materials and replacement cost of your home
  • The amount of your mortgage
  • Your credit score and payment history
  • Whether you have a pool, a pool house, or other structures on the property
  • Whether you operate a business out of your home

Did you know?

Jewelry and art valued above a certain amount may require additional insurance coverage to be protected if there is ever a fire, flood, or theft.

Frequently Asked Questions

  • Is home insurance mandatory in Canada?
  • Is home insurance included in my mortgage payments?

Samantha Kohn is a marketing and communications professional and freelance writer with expertise in the financial services, financial technologies and automotive spaces.

Sam is an avid dog-lover and former international traveller, and has recently embraced the opportunity to explore more of her home province of Ontario.