There’s no denying that the rental market in Ontario is pushing people’s budgets, especially in Toronto. Some renters now even have higher housing costs than homeowners, which may make buying property a more attractive option for those looking to build equity in something they can call their own — despite high interest rates in Canada.
However, when transitioning from renting to owning, the cost of home insurance might feel somewhat intimidating if you’ve been accustomed to tenant insurance. The reality is: while home insurance isn’t mandatory by law, if you’re taking on a mortgage, your lender will require that you have it.
Fortunately, home insurance is affordable — more affordable, in fact, than several other monthly expenses that come with being a homeowner, such as your mortgage payment and grocery bill. The average annual cost of home insurance in Ontario is $1,487 — or approximately $124/month.
To put that into perspective, here are four expenses the average monthly home insurance premium in Ontario is cheaper than.
1. Mortgage payment
Compared to your monthly mortgage payment, the cost of home insurance may barely be felt. According to CREA, the average home price in Ontario as of September 2022 was $836,300.
If you were to make a 20% down payment on a home of this price ($167,260) and take out a $669,040 mortgage at a five-year fixed rate of 4.89%, over a 25-year amortization period, your monthly mortgage payment would be approximately $3,849.
2. Transportation
Regardless of whether you own a vehicle or rely on public transit and ride-share services to get around, home insurance is still a cheaper monthly expense.
For example, say you own a 2021 Honda Civic LX, pay 176.7 cents per litre for gas in Toronto, and routinely fill its 46-litre tank. You’ll spend approximately $81.28 to fill your tank at least twice a month, making your monthly gas expense $162.56 or more.
Then there’s car insurance, which for a 2021 Honda Civic LX could cost around $213.75/month for a 35-year-old male driver in Toronto, according to the RATESDOTCA auto insurance quoter. Add your monthly car payment to the list, too, if you’re financing your vehicle.
If you don’t own a car and use a public transit system instead, consider that a TTC pass, for example, costs $156/month. And if you factor in an Uber fare on top of that, for reference, from the east end of the city to downtown, you’ll pay an estimated $18.94 one way outside of surge hours. That means an added $37.88/month at least.
3. Food
Food can be difficult to budget for, as spontaneous social plans can easily involve dining outside of the home. Inflation has sent food costs soaring, making it more expensive to both dine at a restaurant and order in using a food delivery service.
According to Canada’s 2022 Food Price Report, the average 19-to-30-year-old man is predicted to spend around $330 per month on groceries this year, while the average woman in the same age range is anticipated to spend roughly $288. If you’re a family of four, you can expect that cost to jump to $1,230 a month. Add to any of these figures at least a few takeout/dining out nights a month, and you can quickly find yourself with a much larger monthly food expenditure.
4. Utilities
Because hydro is often the most expensive utility bill to pay, it can exceed your monthly home insurance premium even before considering your water and gas bills.
According to the Ontario Energy Board (OEB), residential electricity alone can cost around $110/month for a home using the average 700 kWh per month, while a gas bill can cost around $87/month for a home that uses 7.37 GJ of gas on a monthly basis, depending on the season. On top of that, a water bill can cost approximately $90/month for a household using 18 cubic metres of water every month.
As a rough estimate, that makes your total expected utility cost as a homeowner at least $287/month.
Find the lowest home insurance rate for your home
Depending on whether you live alone, with a partner, or with a family, your monthly living expenses can exceed the totals referenced above. In that case, home insurance is an even more affordable product in comparison to your other monthly expenses. When you factor in the benefits of protecting yourself financially in the event your home is damaged after a major event, like an indoor flood, fire, or theft, home insurance is an invaluable tool.
And while it’s already less expensive than many of your other monthly expenses as a homeowner, you have the power to lower your home insurance rate even more by shopping the market. Comparing rates from Canada’s top home insurance providers is the easiest way to protect your home, wallet, and peace of mind.
While you might be concerned about yet another homeownership cost, home insurance can be the most important expense you pay each month. Without it, you put one of your greatest assets at risk.
