Although home insurance is not mandatory by law in Canada, it is sometimes required by the lender in order to receive or renew a mortgage. Most importantly, having home insurance protects you from having to pay out a large amount in a lump sum in the event of loss or damage. If you’re looking to get insured, you should review different insurers for home insurance quotes. (Learn more about how to compare home insurance).
How much is home insurance?
The average cost of home insurance in Canada is $960 annually, according to Ratehub, an aggregator website (owned by Ratehub Inc., which also owns MoneySense). For example, for home insurance in Ontario, homeowners pay an average of $1,250 a year, while in Prince Edward Island the average is $870, and it’s $924 in British Columbia.
“Home insurance premiums are based upon the likelihood of someone suffering a loss, and how substantial that loss is likely to be,” explains Stefan Tirschler, product and underwriting manager at Square One Insurance Services Inc. in Vancouver. And how much you will pay depends on several factors, including the specifics of your dwelling, scope of coverage, geographical location and your insurer. For example, the higher the value of rebuilding your home, the higher your premiums will be. (It makes sense that it would cost more to insure a massive estate than a small townhome, right?) And depending on where you live, you may have certain risk factors which can make home insurance cost more, such as weather-related damage. Say you live near a coastline, where overland flood insurance is a good idea. And finally, while many insurance providers try to be competitive with pricing, there are deals to be had, if you shop around.
|Province||The average cost for home insurance annually|
|Newfoundland and Labrador||$780|
|Prince Edward Island||$781|
How home insurance works in Canada
Home insurance coverage is the same, whether you have a small house or a mansion. The difference is in the cost of replacing the home and fixing damages. Additional features like a pool or a wood fireplace, and the age of key parts of your structure like the pipes and electricity can also affect your rates.
Contents insurance covers your personal items and belongings in situations of fire, smoke and water damage, theft, vandalism, windstorms and hailstorms and falling objects. Typically that is part of home insurance unless you only have a basic or no-frills policy. As for any items that are more expensive or harder to replace, say, jewellery or musical instruments, you may want to pay more for extra coverage.
Basic vs comprehensive plans: What’s the difference?
If you buy a basic home insurance plan only, you’ll typically receive a pared-down package that includes protection for a few specific events. Fire is usually included, as is damage from wind, and theft. Anything not specifically detailed in your policy is not covered, so it’s crucial to go over every eventuality with an agent. However, protection from events like flooding or earthquakes are usually available as add-ons to basic and comprehensive policies, which come at an additional cost.
There are other things to consider for coverage, too, like accidents. Scott Hawryliw is a civil litigation lawyer at Stewart Esten LLP in Barrie, Ontario. “With any insurance policy you’re buying a scope of coverage,” he explains, adding that homeowners have to also consider liability. “You have to look at the limits of your policy. Think of a slip and fall. Or if your dog bites someone. Do you want a little coverage on that or a lot?”
“In terms of whether you require contents insurance, the answer is pretty simple,” Tirschler says. “If you have personal belongings, and you couldn’t afford—or wouldn’t want—to use your own financial resources to buy everything again in the event of a serious loss, then you need contents insurance.”