Is home insurance mandatory in Canada?

No province requires homeowners to carry home insurance. Mortgage lenders do, though: proof of coverage is a condition of the mortgage and is normally checked before the purchase closes. A homeowner with no mortgage can go uninsured, but then carries the full cost of fire, theft, weather damage and liability claims personally.

What does standard home insurance cover in Canada?

A homeowner policy combines several coverages: the dwelling itself, detached structures such as a garage or fence, personal property (contents), additional living expenses if a covered loss forces you out of the home, and personal liability if someone is injured on your property or you damage someone else's property. Overland flooding, sewer backup and earthquake are normally excluded unless you add an endorsement.

What is the difference between comprehensive, broad and named-perils home insurance?

A comprehensive (all-risk) policy covers every cause of loss except those it specifically excludes. A broad form covers the building on an all-risk basis but contents only for listed perils. A basic or named-perils policy pays only when the damage comes from a peril the policy lists, such as fire, lightning, windstorm or theft. No-frills policies exist for homes that do not qualify for standard coverage.

What is the difference between replacement cost and actual cash value?

Replacement cost pays what it costs today to repair or replace damaged property with new property of similar kind and quality. Actual cash value (ACV) deducts depreciation, so an older item or roof is paid at what it was worth just before the loss. Guaranteed replacement cost goes a step further and pays to rebuild even if the cost exceeds the dwelling limit, subject to the insurer's conditions.

Is flooding covered by home insurance in Canada?

Water that bursts suddenly from a pipe or appliance inside the home is usually covered. Water that enters from outside, such as a river overflowing or heavy rain pooling against the foundation (overland water), and water that backs up through floor drains (sewer backup) are excluded from most standard policies and need separate endorsements. Gradual leaks and seepage are treated as maintenance and are not covered.

When do I need home insurance when buying a house?

Before closing. The lender and your real estate lawyer or notary will ask for proof that a policy takes effect on the closing date, usually a binder or certificate from the insurer. Arranging it a few weeks ahead leaves time to compare quotes and deal with any underwriting issues, such as older wiring, before the closing date.

Home Insurance in Canada: Coverage, Policy Types and Guides

Home insurance protects the building you own, the belongings inside it and your personal liability. No Canadian province makes it compulsory, but mortgage lenders require it, and a single fire, burst pipe or lawsuit can cost more than most households could absorb. This guide explains how a standard policy is built, which policy form fits which situation, where the common gaps are, and what matters when you are insuring a home you are about to buy. The guides at the bottom of the page go deeper on costs, companies, condos, tenants and each province.

What home insurance covers

A homeowner policy is a bundle of separate coverages, each with its own limit:

Coverage	What it pays for
Dwelling	The house itself: walls, roof, floors, built-in fixtures and attached structures
Detached structures	Buildings and structures not attached to the house, such as a garage, shed, fence or deck
Personal property (contents)	Furniture, clothing, electronics and other belongings, including many items while they are away from home
Additional living expenses	Extra costs of living elsewhere (hotel, meals, temporary rent) while a covered loss is repaired
Personal liability	Legal defence and damages if someone is hurt on your property or you accidentally damage someone else’s property
Voluntary medical payments	Small medical costs for an injured guest, paid without anyone having to prove fault

Each coverage has its own limit, shown on the policy’s declaration page. The dwelling limit matters most, because it caps what the insurer pays to rebuild the house. Liability is a separate limit, chosen on its own.

Insure the rebuild cost, not the market value

The dwelling limit should equal what it would cost to rebuild the house from the foundation up at today’s labour and material prices. Market value includes the land, which does not burn down, and it moves with the housing market rather than with construction costs, so the two figures can differ widely in either direction. Insurers estimate rebuild cost from square footage, construction quality, finishes and local building costs, and the estimate should be reviewed after a renovation, an addition or a finished basement.

Policy types: comprehensive, broad and named perils

Canadian insurers sell homeowner coverage in a few standard forms:

Comprehensive (all-risk): covers the building and contents against every cause of loss except the ones the policy excludes. This is the broadest form.
Broad form: all-risk coverage on the building, but named-perils coverage on contents. It is a mid-priced option between comprehensive and named perils, and leaves the contents more exposed.
Basic or named perils: pays only when the damage comes from a peril the policy lists, such as fire, lightning, windstorm, hail, explosion, smoke, theft or vandalism. Anything not on the list is not covered.
No-frills: a limited policy for homes that do not meet standard underwriting rules, for example because of their condition or unusual risks.

The practical difference shows up on unusual losses. Under an all-risk policy, a loss is covered unless an exclusion applies; under a named-perils policy, it is covered only if it came from one of the listed perils.

Replacement cost vs actual cash value

How a policy values a loss matters as much as what it covers.

Settlement basis	How it pays	Example: 10-year-old roof that costs $15,000 to replace
Replacement cost	Cost to repair or replace with new property of similar kind and quality	$15,000, less the deductible
Actual cash value (ACV)	Replacement cost minus depreciation for age and wear	Less than $15,000, because 10 years of wear are deducted, then less the deductible
Guaranteed replacement cost	Full rebuild cost even if it exceeds the dwelling limit, subject to conditions	Covers the rebuild if construction costs have outpaced the limit

Replacement cost policies usually require you to actually repair or replace the property to receive the full amount; until then, many pay ACV. Guaranteed replacement cost protects against a dwelling limit that has fallen behind construction costs, but insurers typically require the limit to match their own estimate and the home to be rebuilt on the same site.

Common exclusions and the endorsements that fill them

A standard policy excludes some of the costliest losses Canadian homeowners face. Several can be added back for an extra premium:

Gap in a standard policy	How it is usually handled
Overland water (rivers, lakes, heavy rain entering at ground level)	Overland water or flood endorsement, where the insurer offers it for your address
Sewer backup (water and sewage coming up through floor drains)	Sewer backup endorsement, often with its own limit; some insurers give an incentive for a backwater valve
Earthquake	Earthquake endorsement, usually with a percentage deductible; most relevant in BC and parts of Quebec and eastern Ontario
Service lines (water and sewer pipes between the house and the street)	Service line endorsement
Home-based business equipment and liability	Home business endorsement or a separate business policy
Jewellery, art, bikes and collectibles above the policy’s sublimits	Scheduling the items individually
Gradual leaks, wear and tear, rot, mould from long-term moisture, pests	Excluded: treated as maintenance
A home left vacant beyond the period the policy allows	Notify the insurer and arrange vacancy coverage

Overland water and sewer backup are separate endorsements, and the difference matters: a basement flooded by a storm can involve both, and a policy with only one of them may pay for part of the damage. Earthquake coverage matters most on the West Coast, which is why the BC home insurance guide covers percentage deductibles in detail. Older homes raise their own issues: knob-and-tube or aluminum wiring and galvanized or lead plumbing raise the premium, and updating them can lower it. Upgrades that lower premiums are covered in home renovations that lower insurance premiums.

What drives the premium

Location is a major rating factor: weather and flood exposure, distance to a fire hall and hydrant, and the number and cost of past claims in the neighbourhood. Then come the rebuild cost, the age and condition of the roof, wiring, plumbing and heating, the construction type, your claims history and the deductible you choose. Shopping around, bundling home and auto with one insurer and choosing a higher deductible are common ways to bring the price down. Province-by-province survey figures and the discounts insurers offer are on the page for average home insurance costs in Canada, and the best home insurance companies in Canada guide compares the main insurers.

Insuring a home you are buying

Buyers have a deadline that existing owners don’t: the policy has to be in place on closing day.

Lender requirement. The mortgage terms make insurance a condition. The policy carries a standard mortgage clause naming the lender as mortgagee (first loss payee), so the lender has first claim on the insurance money for the dwelling. Standard mortgage terms also typically let the lender buy insurance itself if you don’t, covering only its own interest, and add the cost to the mortgage.
Binder before closing. Your real estate lawyer or notary will ask for proof that coverage starts on the closing date. Insurers provide this as a binder or certificate of insurance, before the full policy documents are issued.
Timing. Starting quotes a few weeks before closing leaves time to compare insurers and deal with underwriting questions before the binder is needed.
What insurers ask for. Expect questions on the address, year built, construction type, square footage, heating system, electrical panel and wiring type, roof age and material, plumbing, and your claims history. The home inspection report answers most of them, and the home inspection guide explains what an inspector checks.
Condo purchases. A condo buyer insures the unit, improvements and liability, while the condo corporation insures the building. The condo insurance guide covers the corporation’s deductible and loss assessments.

Insurance sits alongside other closing costs such as title insurance and land transfer tax, and it becomes part of the monthly carrying costs of owning a home.

Filing a claim

After a loss, the order of steps matters: make the home safe, take reasonable steps to prevent further damage (shut off the water, cover a broken window), photograph and video everything before cleaning up, keep receipts for emergency repairs and hotel stays, and report the claim to the insurer promptly. The insurer assigns an adjuster to assess the damage. Small claims can raise future premiums, so some owners pay minor losses themselves. Step-by-step detail is in how to file an insurance claim in Canada, and what happens if insurance denies your claim covers disputes.

Home insurance guides

Costs and companies

Average home insurance cost in Canada: survey figures by province, the factors insurers price and the discounts that lower a premium
Best home insurance companies in Canada: the main insurers compared, with deductible and bundling trade-offs
Do you need a home warranty?: what a warranty covers that insurance doesn’t, and when it is worth buying

Condo and tenant insurance

Condo insurance in Canada: the corporation’s master policy, unit improvements and loss assessment coverage
Tenant insurance in Canada: how renters coverage works, what it costs and whether you need it
Best tenant insurance companies: providers compared for renters
Tenant insurance in Ontario, British Columbia, Alberta and Quebec

Home insurance by province

Ontario home insurance: urban flooding, older housing and city-by-city risks in Toronto, Ottawa, Hamilton and Mississauga
Alberta home insurance: hail, floods and wildfire, with a section on Edmonton
Calgary home insurance: Canada’s hail capital and its flood-zone communities
BC home insurance: earthquake coverage, wildfire and atmospheric rivers, with a section on Metro Vancouver
Saskatchewan home insurance: hail, spring runoff and SGI Canada
Manitoba home insurance: Red River flooding, extreme cold and Winnipeg
Quebec home insurance: civil-law rules, plexes, ice storms and spring floods
New Brunswick home insurance: Saint John River flooding and two coastlines
Nova Scotia home insurance: post-tropical storms, storm surge and Halifax
Newfoundland and Labrador home insurance: wind, snow load and remote properties