What Is Home Insurance in Canada?
Home insurance in Canada helps protect your home and belongings against certain types of loss or damage covered by your policy. It may also provide personal liability coverage and help with additional living expenses if a covered loss temporarily prevents you from living in your home.
The exact protection you receive depends on your policy, coverage limits, exclusions and endorsements. Before buying a policy, it’s important to understand what is covered and what isn’t.
If you own a home, you should also keep an up-to-date list of your belongings, including photos, receipts and replacement costs for major items. This information can be useful if you need to make a claim.
Table of Contents
What Does Home Insurance Cover?
Coverage varies by policy, but home insurance in canada generally protects several key areas of your property.
Your Home and Belongings
Coverage may apply to damage or loss involving your home and personal possessions when the cause of loss is covered by the policy.
Your policy may also cover personal property stolen from your vehicle, depending on the circumstances and policy terms.
Personal Liability
Liability coverage can protect you against legal liability for injury to other people or damage to someone else’s property.
For example, if someone is injured on your property and you are legally responsible, your liability coverage may respond subject to the terms and limits of your policy.
Additional Living Expenses
If a covered loss makes your home temporarily unlivable, your policy may help pay certain additional living expenses, such as hotel or rental accommodation, subject to the policy’s limits and conditions.
What Does Home Insurance Not Cover?
Home insurance doesn’t cover every type of damage.
Policies generally don’t cover predictable events or normal maintenance. For example, damage caused by a lack of maintenance may not be covered.
Certain unexpected events may also be excluded from a standard policy. Earthquakes, floods, landslides and sewer backup may not be covered, although additional coverage may be available depending on your location and insurer.
This is why you shouldn’t assume that every type of water or natural-disaster damage is automatically covered. Check your policy and ask your insurer about exclusions and optional coverage.
How Much Does Home Insurance Cost?
There is no single fixed cost for home insurance in canada, as rates depend on individual property risks.
Insurance companies may consider factors such as:
- Type of residence
- Age, size and construction of the home
- Location
- Replacement value of the home
- Value of your belongings
- Distance from a fire hydrant or fire station
- Crime rate in the neighbourhood
- Claims history
- Coverage and policy type
- Deductible amount
Your premium can also vary between insurance companies. That’s why it’s worth getting multiple quotes and comparing both price and coverage.
What Is a Home Insurance Deductible?
When filing a claim for home insurance in canada, a deductible is the amount you agree to pay upfront before your provider covers the rest.
For example, if you have a $1,000 deductible and a covered claim is worth $5,000, the deductible generally means you would be responsible for the first $1,000, subject to your policy terms.
A higher deductible may reduce your premium, but it also means you’ll have to pay more yourself if you make a claim.
Actual Cash Value vs. Replacement Value
These two terms are important when understanding how an insurance claim may be settled.
Actual cash value generally considers the item’s value when the loss occurs, including depreciation.
Replacement value covers the actual cost to replace an item after a covered loss, subject to the policy’s terms and conditions.
For example, an older computer may have a much lower actual cash value than the cost of purchasing a comparable new computer. The type of settlement available depends on your policy.
How to Choose Home Insurance in Canada
When comparing home insurance policies, don’t look only at the premium.
Check:
- Coverage limits — Make sure the limits are appropriate for your home and belongings.
- Deductibles — Understand how much you would pay if you make a claim.
- Exclusions — Know which events and losses aren’t covered.
- Optional coverage — Ask whether you need additional protection for risks not included in your basic policy.
- Settlement method — Check whether claims are settled using actual cash value, replacement value or another method.
- Policy conditions — Read the terms carefully before signing.
Canada.ca recommends shopping around, getting quotes and comparing policy details rather than choosing solely based on price.
Home Insurance and Your Mortgage
If you have a mortgage, your home insurance policy will usually include a loss payee clause that identifies your mortgage lender as a beneficiary.
If you make a claim for damage to your home, the insurer may pay the lender up to the outstanding mortgage balance. Depending on the circumstances, the insurer may instead provide the claim funds to you so you can complete repairs, subject to its procedures and the policy.
This is one reason home insurance is an important part of the home-buying process.
You can also read our guides on Mortgage Pre-Approval in Canada and Down Payment in Canada.
Frequently Asked Questions
Is home insurance required when buying a home in Canada?
The requirements can depend on your situation and lender. If you have a mortgage, your lender will generally have insurance requirements that you need to meet as part of the mortgage agreement.
Does home insurance cover floods?
Not necessarily. Flood coverage may not be included in a standard home insurance policy. Additional coverage may be available depending on the insurer and your location.
Does home insurance cover earthquakes?
Earthquake damage may not be covered by a standard home insurance policy. Additional earthquake coverage may be available through an endorsement or other optional coverage.
Can home insurance premiums change?
Yes. Premiums can vary based on factors such as your home, location, coverage, deductible and claims history.
Should I compare home insurance quotes?
Yes. Canada.ca recommends shopping around and comparing quotes and policy details before choosing an insurance provider.