Home Insurance

Home insurance (also called property insurance or homeowner’s insurance) is one of the non-negotiable costs of homeownership. Your mortgage lender requires it as a condition of your loan — in fact, proof of insurance must be in place before closing day — but even if you owned your home outright, you would need it to protect your most valuable asset.

A house fire, a burst pipe, a severe windstorm, or a liability lawsuit can cause financial damage that would be impossible to absorb without insurance. Understanding what your policy covers — and just as importantly, what it does not — helps you make informed decisions and avoid costly gaps in your coverage.

What Home Insurance Covers

A standard home insurance policy in Canada (often called a “comprehensive” or “broad form” policy) typically covers four main areas:

Dwelling Coverage

This covers damage to the physical structure of your home — the walls, roof, foundation, built-in appliances, plumbing, electrical, and heating systems — from covered perils. Covered perils typically include fire, lightning, windstorm, hail, explosion, vandalism, and certain types of water damage (like a burst pipe).

Your dwelling coverage amount should reflect the replacement cost of your home — the amount it would cost to rebuild your home from scratch at today’s construction prices. This is different from (and often lower than) your home’s market value, which includes the land.

Personal Property Coverage

This covers damage to or theft of your personal belongings — furniture, electronics, clothing, kitchenware, books, sports equipment, and other items inside your home. Coverage typically extends to belongings even when they are temporarily outside your home (for example, items stolen from your car or lost luggage during travel).

Most policies cover personal property at actual cash value (replacement cost minus depreciation) unless you pay extra for replacement cost coverage, which pays to replace items at today’s prices without deducting for age or wear. Replacement cost coverage is worth the modest additional premium.

Tip

Do a home inventory before you need to make a claim. Walk through every room and video or photograph your belongings. Note serial numbers for electronics. Keep the inventory in cloud storage or a safe deposit box — not just on your computer at home. If your home is damaged, this inventory makes the claims process much faster and ensures you do not forget items.

Liability Coverage

Liability coverage protects you if someone is injured on your property or if you accidentally cause damage to someone else’s property. It covers legal defence costs and any damages awarded against you, up to the policy limit.

Standard liability coverage is typically $1,000,000, but you can (and should) increase it to $2,000,000 for a modest additional premium. If a visitor slips on your icy walkway and suffers a serious injury, the medical costs and potential lawsuit could easily exceed $1,000,000.

Additional Living Expenses (ALE)

If your home is uninhabitable due to a covered claim (for example, a fire or severe water damage), ALE coverage pays for temporary housing, meals, and other living expenses while your home is being repaired or rebuilt. This can cover hotel costs, restaurant meals, laundry, and even temporary storage for your belongings.

ALE coverage is typically capped at a percentage of your dwelling coverage or a specific dollar amount, and it has a time limit (often 12-24 months).

What Home Insurance Does NOT Cover

This is where many new homeowners get an unpleasant surprise. Standard home insurance policies do not cover several common risks:

Overland Flooding

Water damage from rising rivers, lakes, or surface water runoff is not covered by standard policies. With climate change increasing the frequency and severity of flooding events across Canada, this is a significant gap. Overland flood coverage is available as an add-on rider for an additional premium.

Sewer Backup

Water damage caused by backed-up sewer or drain lines flooding your basement is typically excluded from standard coverage. Sewer backup is one of the most common — and most expensive — types of water damage Canadian homeowners face. A single sewer backup event can cause $10,000 to $50,000+ in damage. Sewer backup coverage is available as a rider.

Earthquakes

In BC and other seismic zones, earthquake damage requires a separate rider or policy. Standard home insurance does not cover damage caused by earthquakes.

Gradual Deterioration

Slow leaks, mould from ongoing moisture, wear and tear, and gradual deterioration are not covered. If your roof has been leaking slowly for months and causes mould in your attic, that is a maintenance issue — not an insurance claim. Insurance covers sudden and accidental events, not the consequences of deferred maintenance.

Home-Based Business Equipment

If you run a business from home, your business equipment and inventory may not be covered under your personal home insurance policy. You may need a separate business insurance policy or a home-based business endorsement.

High-Value Items

Standard policies have sub-limits on certain categories of valuable items — jewelry, art, collectibles, musical instruments, and electronics. For example, your policy may cap jewelry coverage at $5,000 to $10,000 total, even if your collection is worth more. If you own high-value items, you can purchase a scheduled items endorsement (also called a floater or rider) that provides full coverage for specific items.

Caution

Sewer backup and overland flooding coverage are available as add-on endorsements (riders) for an additional premium. Given the increasing frequency of extreme weather events across Canada, these riders are strongly recommended. The cost is typically $50 to $150 per year each — a fraction of the $10,000 to $50,000+ a major water event could cost you. Add both riders to your policy.

Shopping for Home Insurance

Do not just accept the first quote you get. Home insurance premiums vary significantly between companies, and a few hours of shopping can save you hundreds of dollars per year. Here is how to shop effectively:

Get Multiple Quotes

Contact at least three insurers or brokers for quotes. Provide the same information to each one so the quotes are comparable. Online quote tools are a good starting point, but a phone call with a broker can often uncover discounts or coverage options the online tool misses.

Use an Insurance Broker

An insurance broker represents you, not the insurance company. They shop multiple companies on your behalf and can find you the best combination of coverage and price. Brokers are particularly useful for first-time buyers who are not familiar with the insurance market. Their services are typically free to you — they earn a commission from the insurer.

Understand Your Deductible

Your deductible is the amount you pay out of pocket before insurance kicks in. A higher deductible means lower premiums, but more out-of-pocket cost when you make a claim. Standard deductibles range from $500 to $2,500. Consider choosing a deductible you can comfortably afford to pay if you need to make a claim.

Ask the Right Questions

When comparing policies, ask:

• What perils are covered, and what is excluded?
• Is personal property covered at replacement cost or actual cash value?
• What are the sub-limits on jewelry, electronics, and other valuables?
• What is the claims process, and what is the average response time?
• Are sewer backup and overland flooding riders available, and what do they cost?
• Is there a discount for claims-free history?

Review Annually

Your insurance needs change over time. Review your coverage every year and update it if you:

• Complete major renovations that increase your home’s value
• Purchase expensive items (jewelry, electronics, art)
• Add a pool, hot tub, or trampoline (these increase liability risk)
• Start a home-based business
• Install a wood-burning stove or fireplace

Typical Costs

Home insurance premiums in Canada vary based on many factors, but here are typical ranges:

Property Type	Typical Annual Premium
Detached house (standard)	$1,200 - $2,500
Semi-detached or townhouse	$1,000 - $2,000
Condo (unit owner’s policy)	$300 - $600
Older home (50+ years, heritage)	$2,000 - $4,000+
Rural property	$1,500 - $3,000+

For a standard detached home valued at $500,000 (replacement cost), expect to pay approximately $1,200 to $2,500 per year, or $100 to $210 per month.

What Affects Your Premiums

Several factors influence how much you pay for home insurance:

• Location — Homes in areas prone to flooding, wildfires, or environmental hazards pay more
• Age and construction of the home — Older homes and wood-frame construction cost more to insure than newer homes with modern materials
• Replacement cost — Higher replacement cost means higher premiums
• Claims history — Previous claims on the property or by you personally can increase premiums
• Deductible amount — Higher deductible = lower premium
• Heating system — Oil-heated homes typically cost more to insure than gas or electric
• Proximity to fire hydrant and fire station — Homes farther from emergency services may pay more
• Roof age and material — An old roof or wood shake shingles increase premiums
• Dog breed — Some insurers charge more or decline coverage for certain dog breeds
• Swimming pool or hot tub — Increases liability risk and premiums
• Security and safety features — Monitored alarm systems, smoke detectors, and deadbolt locks can reduce premiums

Bundling Discounts

Most insurers offer a multi-policy discount of 10-20% if you bundle your home and auto insurance with the same company. On a combined annual cost of $3,500 (home + auto), a 15% bundling discount saves you $525 per year.

Other common discounts include:

• Claims-free discount — No claims in the past 5-10 years
• New home discount — Homes built within the last 5-10 years
• Mortgage-free discount — No mortgage on the property
• Alumni or professional association discounts — Some insurers offer group rates
• Loyalty discount — Long-term customers (3-5+ years)

Ask your broker or insurer about every available discount. They add up quickly.

Tip

Do not let your home insurance lapse — even for a single day. A gap in coverage can make it difficult and expensive to get insured again, and your lender may purchase forced-placed insurance on your behalf at a much higher cost. Set up automatic payments or calendar reminders for renewal dates.

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