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Home insurance premiums may be just another bill to pay, but it’s one that could protect you from financial ruin. 

But as helpful as a home insurance policy may be, is it necessary to have one? More specifically, are you required to have a home insurance plan as a homeowner in Canada by law?

Is Home Insurance Mandatory In Canada?

No, home insurance is not mandatory in Canada. That said, it’s recommended that all homeowners have home insurance to cover the cost of damage or loss, which could be substantial. 

For instance, damage from a fire or loss due to theft can leave you with a hefty bill to cover. But with a home insurance policy in place, you won’t be left paying the bill out-of-pocket.   

Do You Need Home Insurance To Get A Mortgage?

While there’s no law in Canada that says you must have home insurance, most mortgage lenders will require it when you apply for a home loan to finance a home purchase. 

Your lender is taking on a risk by lending hundreds of thousands of dollars for you to buy a house. In this case, the lender will want to make sure that your home is in good condition and that it’s not at an increased risk of damage. 

At the end of the day, your lender will want to know that your home is insured to protect their investment. After all, if your house burns down and you don’t have the means to rebuild, forcing you to declare bankruptcy, your lender will have no recourse to recoup their money. 

As such, lenders will generally require you to have a home insurance policy before approving you for a mortgage.  

Where Can You Get Home Insurance In Canada?

AvailabilityFeatures
Loans Canada (Home) logo
Loans Canada
Across Canada
  • Free online quotes
  • Compare multiple options
MyChoice (home) logo
MyChoice
Across Canada
  • Free online quotes
  • Compare multiple options
Apply
Insurely logo
Insurely
Across Canada (except Quebec)
  • Free online quote
  • Discounts may be available
Apply
Insurdinary logo
Insurdinary
BC, AB, SK, MB, ON, NB, NS, PEI
  • Free online quote
  • Compare multiple options
  • Shop for all your insurance needs in one place
Square One logo
Square One
BC, AB, SK, MB, ON, QC
  • Free online quote
  • Discount for policy bundles
Apply
Onlia logo
Onlia
ON
  • Free online quote
  • Discounts available
Apply
Apollo logo
Apollo
BC, AB, BC, SK, ON, NS
  • Low rates starting at $11 per month
  • Free online quote
  • Student tenant insurance policies available

Should You Get Home Insurance?

Even if you’re not buying a new home and don’t have to comply with a lender’s requirements, you might still want to consider taking out a home insurance policy. Here are a few reasons why:

Replace Your Belongings

Whether your personal property is destroyed, lost, or stolen, a home insurance plan will provide you with the funds needed to replace them, as long as they’re covered under your policy.

Repair Your Home’s Structure

In the event of a fire, flood, or another disaster, your home may have undergone extensive damage. This can leave you with tens of thousands of dollars in repairs, which may be covered under a home insurance policy.

Protect You Against Litigation

If someone is injured while on your property, you could be held liable and be taken to court. In this case, you could be slapped with a hefty legal bill. But your home insurance policy will protect you against legal and financial liability. Otherwise, you’d have to pay out-of-pocket for lawyer fees, medical fees, and compensation.

Protect Your Equity

Your home is likely your biggest and most valuable asset. As such, you’ll want to do what you can to protect it. A home insurance policy will ensure that if something happens to your property, you’ll have the financial backing to repair your home and retain its value.  

How Much Does Home Insurance Cost?

The cost of home insurance depends on a variety of factors, such as:

  • Your coverage amount
  • Your location
  • Your home’s age and condition
  • Your claims history
  • Alarms and other security measures

That said, the average cost of a home insurance policy in Canada is approximately $1,000 per year. You can choose to pay your premiums annually or monthly.

Final Thoughts

Your home insurance policy can potentially save you tens or even hundreds of thousands of dollars if your home or its contents are damaged or destroyed. While home insurance in Canada is not mandatory, it’s highly recommended for all homeowners to have.

Home Insurance FAQs

Is home insurance mandatory in Canada if your mortgage is paid off?

Once you’ve paid off your home loan, you are no longer obligated to have home insurance. However, it’s still recommended to keep your policy in place to protect you in the event of unexpected damage or loss.

What is deposit insurance?

Deposit insurance protects your money in the event that your financial institution goes under. Your eligible deposits are automatically insured by the Canada Deposit Insurance Corporation (CDIC).

Is home insurance worth it?

Having a home insurance policy will give you peace of mind knowing that you’ll be covered in the event that the unexpected happens. While insurance premiums might seem expensive, they pale in comparison to how much you could wind up paying out-of-pocket if your home is ever damaged or your belongings are destroyed or stolen.
Lisa Rennie avatar on Loans Canada
Lisa Rennie

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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