Whether you’re a tenant or owner, home insurance in Canada is more crucial than ever. Insurance coverage for your home ensures you’re not personally liable for:
- Damage to your property’s interior and exterior
- Destruction of your property up to and, possibly, including the full replacement of your home
- Accidents, injuries, or worse that can happy on your property
- Depending on your plan, loss of personal property from theft, losses resulting from the dishonesty of others, and even identity theft
It’s alarming to know that in-home accidents rose nearly 14% in 2020. But, it’s important to remember that home insurance in Canada protects you and your family from liabilities.
Reducing your liabilities means protecting your personal finances. So, having the right insurance is part of your overall financial health.
Understanding Home Insurance in Canada
No matter where you live in Canada, it is imperative that you carry an appropriate level of homeowners’ or renters’ insurance. Home and renters’ insurance helps reduce your personal liability for accidents. This insurance coverage also lowers the cost of repairing or replacing your property when it is damaged and replacing your personal belongings.
Home and renters’ insurance helps reduce your personal liability for accidents. This insurance coverage also lowers the cost of repairing or replacing your property when it is damaged and replacing your personal belongings.
If you are a homeowner, your insurer will at minimum cover perils (e.g. natural disasters, fire, etc.), the internal and external structure of your home, and liabilities. Beyond this, you can likely choose a whole host of add-on coverage, including limits regarding your personal effects.
You must make regular payments for both homeowner’s and renter’s insurance. Payments are generally made on a monthly or annual basis. The amount you pay each month or year is called an insurance premium.
It’s important to make your payments on time. Your policy must be in good standing for claims to be paid out. Also, unless otherwise specified, both homeowner’s and renter’s insurance generally require that a deductible be paid prior to claim payment.
Where to Buy Home and Renter Insurance in Canada
There are of course many insurance providers in Canada. It is very important you take the time to research insurance companies and compare similar levels of insurance against each other. This approach will ensure you secure a policy with a reputable insurer at the best rate possible.
We’ve teamed up with Square One Insurance Services to provide our readers with a great option. Square One has an A+ rating with the Better Business Bureau, and a 4.7-star reviewer rating with over 32,000 reviews.
Square One’s home insurance policies can start at just $12/month, with options for renters (tenants), condo owners, and homeowners.
More on Types of Insurance
Just as you’d invest in insurance to protect your health, you must do the same for your home. With homeowner’s insurance, you’re covered house, condo unit, townhome, or apartment you live in. This can also include attached and detached structures such as a garage.
If you’re considering a Canadian mortgage, most lenders require you to purchase homeowner’s insurance.
With renter’s insurance, however, the landlord will insure only the building (and, likely all interior and exterior common spaces). You provide your own liability coverage and protection for your personal belongings.
The owner of a property takes out a homeowner’s insurance policy. This policy typically covers what it will cost to replace the home. It will also cover the complete loss of any personal property in the structure, such as:
- Dishes and other household goods
A simple example: Suppose your home costs $200,000 and your belongings cost $150,000. If you want to protect everything, you need a homeowner’s policy for at least $350,000.
Renter’s Insurance in Canada
Tenants insurance is for anyone who rents a property to live in. Still, it enables tenants to limit their liability in the event of an accident while also protecting their valuables.
Suppose there’s a fire and all belongings in the structure are destroyed. In such a case, the renter’s insurance policy will reimburse the tenant for the replacement cost of the lost goods.
Is Insurance Necessary?
Let’s provide a real-world example: You and your spouse just purchased a $900,000, 2800 square foot home in Alberta. You have four bedrooms, lots of furniture, and a couple of vehicles in the garage. In total, you probably have $1,500,000 in total structural and personal property value.
If you don’t have an insurance policy, you’re on the hook for $1,500,000 to rebuild your home and life.
So, why would you not want to pay $1300/year for coverage that would pay for all of that in the event of a catastrophe?
Is home insurance necessary? In some cases, yes (e.g. if you carry a mortgage, your lender will require it). However, if you own your home, it’s not required. But, again, why would you not take a small annual expense to have $1,500,000 worth of peace of mind?
The Same Applies to Tenant Insurance
Landlords, on the other hand, often require renters to obtain insurance. They typically include language to that effect in the lease. And, other than the minimum liability coverage amount required by your landlord, you can generally choose your personal property replacement limit. This means you can decide how much risk you want to take on versus how much you’re willing to spend on the policy each month.
Remember: With homeowner’s insurance, you’re insuring a much more substantial asset—the structure. Homeowner’s insurance costs more than renter’s insurance for this reason.
Home Insurance in Canada
Buying your own home will probably be one of the most exciting and rewarding times of your life. The feeling of successfully closing on a home is especially thrilling in today’s tough real estate and mortgage market. Home insurance is a brilliant way to protect your investment.
Again, homeowner insurance is not mandatory in Canada. However, you’ll typically need to purchase it if you’re buying a home or renewing a mortgage. This lender requirement is a good thing.
The insurance will protect you from paying out-of-pocket in the event of loss or damage to your home. It will also shield you from liability if someone gets hurt on your property.
Home Insurance and Renter Insurance: Things to Keep in Mind
There are no cons to purchasing insurance. It’s a vital part of managing your money wisely and reducing your exposure to risks.
Again, it keeps you from paying out-of-pocket for unexpected accidents. It also protects you from liability.
When purchasing insurance, however, it’s important to compare quotes for policies. You must also know what’s included in your coverage. Different insurers will offer different benefits, depending on your situation and what they offer.
Why Get Insurance?
There are many good reasons to invest in home insurance. Almost anything could go wrong with your home or apartment. A break-in or a fire could damage your property or rental. Also, if you’re buying a home, most banks will not allow you to take possession of your home until you provide proof of coverage.
In part, home insurance costs are rising due to issues such as climate change, but don’t let that put you off from shopping for the best rate you can find. Some people wait until the last minute to shop around for insurance. They don’t realize that they need it before buying a home.
It’s not a good idea to rush out and buy the first policy you find. Instead, you should understand how insurance works and figure out how to get the right coverage for your needs.
What Does Homeowner’s Insurance Protect?
The biggest benefit of homeowner’s insurance is that it keeps you from paying out-of-pocket. It covers you financially if you should need to replace or repair something in your home due to an accident.
What you receive for your premium, other than this coverage, is peace of mind. With insurance, you know that you can afford to fix or replace your home if something goes drastically wrong.
Also, someone can sue for injuries sustained on your property whether or not it’s your fault. Insurance also covers the cost of legal fees if someone gets hurt on your property and decides to sue.
With homeowner’s insurance, you’ll have protection from this kind of liability, whether you, a family member or even a pet causes an accident. The insurance also pays for any medical fees the courts may find you liable to pay.
Buying Home Insurance
There are a few common steps most people follow when buying homeowner’s insurance. You’ll begin by checking out various insurance providers by going online or making phone calls. As we noted above, Square One Insurance Services is a great option and they provide an instant quote.
You can also choose to speak with an insurance broker about different policies. It’s helpful to consult with a broker to ensure you’ve fully insured your home.
As you speak with various service providers, you’ll need to provide information about your home insurance needs. For example, you may need to share the following:
- Coverage start date
- Type of home (normally with a certain amount of detail including square footage)
- Who lives with you
- Information regarding your valuables in the home
- Details regarding security, fire, carbon monoxide, and leak detection and monitoring
This is not a comprehensive list but it should give you an idea of what to expect during the application process.
You will also want to ask if you qualify for any discounts. For example, you may receive a discount because you graduated from a particular university or if you were in the Canadian Armed Forces or RCMP.
Once you provide all of this information, the insurer or broker will send you a quote to consider and possibly purchase against.
Cost of Insurance for Your Home
Canadian homeowners pay about $960 a year for insurance. Still, a policy could cost more depending on your province and the details of your home. Conversely, it may cost less.
Several factors affect the annual premium. For example, the market value of your home will affect how much you pay, as will the replacement value. Construction details like the wiring, plumbing, framing, and age of your home can also affect the premium.
More Factors Affecting Home Insurance Cost
Your chosen deductible and any add-ons in coverage limits will also affect the cost of your insurance policy. The greater your deductible, the less you’ll pay in premiums. If something happens to your home, however, you’ll pay more out-of-pocket.
You must also consider your credit score when purchasing insurance. Many people aren’t aware that a poor credit score can cause your insurance premium to increase.
Important Note: Having your credit checked for an insurance policy is generally optional. You may however receive better pricing if you have a high credit score. The option you choose is entirely up to you, but remember that your credit score may be affected.
Lowering Your Premiums
You can’t control some of the circumstances that will cause you to pay more for homeowner’s insurance. However, there are some money-saving tips that may help.
For example, you can consider installing an alarm and security cameras. Some insurers will offer a rebate if you have a security system. You can also bundle your home and car insurance with the same insurer for a discount.
Finally, you can pay your premium on a yearly basis instead of monthly. Usually, an insurer will offer a better deal if you purchase an annual policy.
More Money-Saving Tips
Again, you can also increase your deductible, and don’t forget to compare quotes. By shopping around, you can find the best policy for your needs.
It’s a good idea to improve your credit before you go shopping for coverage. Also, don’t over-insure for the replacement cost of your home and belongings.
Once you’ve secured insurance, don’t file claims for minor damage, even if it’s covered. For example, a pipe may burst and cause minor water damage. If you use your insurance, your premiums will go up, and you’ll end up paying more in the long run.
Understanding Renter’s Insurance
Tenant insurance is generally very affordable. Insurers designed renter’s policies especially to protect tenants in the event of damage or loss.
Some renters believe their landlord’s insurance will protect them from any losses. However, the insurance held by landlords only protects the structure and common areas of the property.
It doesn’t cover your personal belongings. It also doesn’t protect you from liability if someone gets hurt visiting your rental. You’ll need renter insurance for these kinds of protections.
Buying Renter’s Insurance
Many people think that buying renter’s insurance is a complicated process. In reality, however, it’s pretty straightforward.
The process will begin with you deciding what you want to cover. With this information, you can figure out how much insurance you need to replace your goods if you were to lose them.
Now, you can shop around, choose an insurance policy, and purchase it.
Do You Need Renter’s Insurance?
Imagine your rented residence experienced a disaster. For example, a pipe may burst. Alternatively, your neighbour may have a fire, and smoke seeps into your unit. You can even find that you’ve become the victim of a robbery.
These kinds of emergencies can leave you scrambling to assess damage to your personal items. Likewise, you may need to figure out if things are missing.
You may even need to relocate temporarily. These types of instances can deplete your savings.
This is where renter’s insurance can help. It protects you from losses and liability.
Other Points to Consider About Renter’s Insurance
Often, a tenant will find out that they must purchase renter’s insurance when they sign a lease. Purchasing insurance isn’t required by law.
However, regulations allow Canadian landlords to require tenants to purchase renter’s insurance. If your lease requires renter’s insurance, there’s not much to decide. You must purchase it.
Many landlords prefer renters to carry insurance. The insurance makes it less likely that a tenant will sue the landlord for various reasons. For instance, if someone gets hurt on the property or something gets stolen, tenants are more likely to seek compensation from an insurer rather than the property owner if they have a policy.
Finding Renter’s Insurance
You’ll find a lot of helpful material when searching online for renter’s insurance. Insurance company websites will show you how underwriters operate. They’ll also show you the available standard and optional coverages.
Renter’s insurance also varies by province. Many insurers provide online estimating tools. These insurance calculators will give you an idea of how much you’ll pay for coverage.
Still, it’s important to do your own research when looking for a policy. Again, it’s also helpful to work with a licensed insurance broker.
Renter’s Insurance Buying Tips
There are a few common mistakes that tenants make when looking for renter’s insurance. For instance, tenants often buy the wrong amount of insurance.
They also often by a standard policy and bypass purchasing extra liability coverage. Also, renter’s frequently don’t purchase special coverage like flood insurance if they live in high-risk areas.
Tip: Check with your leasing office to see if they offer promotional coupons for tenant insurance. Very often insurance companies will provide discounts to tenants, especially in new buildings.
It’s crucial to buy the right amount of insurance. With the right policy, you can replace all your belongings if they’re lost.
More Mistakes to Avoid
Other people fail to shop around for the best policy. Often, not shopping around and comparing prices can lead to paying too much for insurance. Many people skip this step. They just take the first policy that they find.
Often, an insurance agent only represents one or a handful of companies. Yet, these policies may not necessarily serve your needs.
Renter’s Insurance Cost
Some tenants may worry about the cost of a renter’s insurance policy. However, there’s no need for concern in this regard.
Renter’s insurance is quite affordable. More importantly, it’s well worth the cost for peace of mind.
On average, you might pay about $144 per year for renter’s insurance. Again, however, the cost of your insurance will vary by province.
Factors Affecting Renter’s Insurance Cost
There are several more factors that can affect the cost of a renter’s insurance policy. The amount and type of coverage can affect the cost of your policy.
For example, you may decide to purchase a standard insurance policy. It will cover your personal property and protect you from liability from certain accidents. It may also provide you with added living expenses if you must temporarily relocate after a disaster.
In most cases, you can increase your limits for all kinds of coverage. Of course, this will increase how much you pay for your renter’s insurance. However, it will provide you with more compensation if you should incur a loss.
Getting the Most Out of Renter’s Insurance
In some instances, you should consider increasing the coverage limit for your personal possessions. This insurance add-on is beneficial if you have high-end jewelry, electronics, or other expensive goods. This kind of supplemental coverage is a rider or floater.
You might also consider a policy that pays the replacement cost rather than the cash value of your goods. This kind of policy replaces your lost or damaged property at its new value rather than its depreciated value.
You might also consider supplemental coverage for specific disasters based on where you live. This kind of coverage might include earthquake or flood insurance.
Renter’s Insurance: Weighing Your Options
Suppose you’ve selected the amount and type of coverage you desire. Now, you must decide whether you want a higher or lower deductible. The deductible is what you’ll pay before receiving a payout for any claims.
For instance, you may have a $500 deductible and experience a $1,000 loss. In that case, you’ll receive $500 in compensation for your losses.
With a lower deductible, however, you’ll typically have higher premiums for the same protection. Conversely, a higher deductible will lower your premiums. With this in mind, it’s a good idea to choose a company that provides deductible options so that you can negotiate your rate.
Types of Insurance for Renters
Again, you must decide what you need to cover when purchasing renter’s insurance. You’ll need this information to figure out the amount of coverage you need.
Let’s examine the various types of renter coverages.
Additional Living Expenses
Renter’s insurance can offer coverage for additional added expenses. For example, your home may become unlivable due to smoke, fire, or other reasons.
In this case, you’ll need to relocate. Usually, this kind of reimbursement will cover the difference between your normal living expenses and increased expenses because of your situation.
Liability insurance shields you and your family members from lawsuits due to property damage. It also protects you from bodily injury caused by you, your family members, or any pets.
Suppose your dog bites the mail carrier. Then, this part of your insurance will cover any resulting expenses.
Personal possession coverage is a standard part of a renter’s insurance policy. It protects things such as:
- Kitchen equipment
- Musical instruments
For instance, you could come home one day to find that a burglar stole some of these items. In that case, your renter’s insurance will reimburse you for your losses.
Usually, you can purchase specialized coverage as an add-on to your renter’s insurance policy. You can also acquire it as an individual policy.
This kind of insurance includes flood and earthquake insurance. It will protect you in case of these kinds of disasters.
Specialized coverage also includes floaters or riders for valuable possessions. You can also invest in an umbrella or excess liability insurance policy to increase your maximum renter’s liability insurance.
Also, if you operate a business from your unit, you can also purchase business property insurance under this category. It will cover items such as business equipment or inventory.
When to Start Shopping Around
Start looking for homeowner’s or renter’s insurance right away when you agree to buy or rent a house. This will give you time to get quotes and get your policy in place before you close on the deal. Most of the time, you’ll have a month or more before you sign a contract and when you close on your new home.
Remember, if you’re buying a home, you’ll usually need to show that you’ve paid the first full year’s premiums on your homeowner’s insurance when you close. With the cost of home insurance on the rise, now is the time to lock in your rate.
Insure Your Financial Interests!
We hope our guide has provided you with what you need to know about home insurance in Canada. Insurance is an excellent financial tool to prevent life’s emergencies from becoming difficult to overcome.
It’s always a good idea to learn more about insurance. Check out our post about insurance to learn more about different types of insurance in Canada.