Buying a home, either for the first time, or your last time, is an important investment decision. The amount of research, time and effort that you put into house hunting should also be put into your quest for home insurance. You want to protect your largest investment the best way you can!
Home insurance is not mandatory in Ontario, but it is required if you want to secure a mortgage. Lenders will not consider you without any home insurance. If you have paid off your home, or can pay for it with cash, then technically you don’t need to have home insurance.
But, it is always recommended that you have it, whether it’s mandatory or not it protects you, your family and your property.
Home insurance protects your home and your possessions against financial loss if they are damaged, lost or stolen. It can also cover living expenses if you are temporarily displaced from your home due to an insured loss.
Most standard policies also protect you from financial liability if someone was injured on your property, or if you cause damage to someone else’s property.
Types of home insurance in Ontario
There are several different types of home insurance policies in Ontario you can choose from and purchase. They include:
Basic (or standard) policy: This is also known as ‘named perils’ and is the cheapest option. This covers your house and its contents against named perils. It only covers the insured perils that are specifically stated in your policy.
Broad policy: This is considered a ‘mid-tier’ policy – more coverage than standard, but less than comprehensive. It covers your home against all risks (minus exclusions) and coverage for your contents against any named risks.
Comprehensive policy: This is the most expensive policy, but provides the most coverage. It covers the building, personal liability and all risks. It covers your home and its contents against all perils (except the ones specifically excluded from your insurance policy).
No Frills policy: This is coverage for properties that don’t meet normal insurance standards.
What does typical home insurance cover in Ontario?
The amount of coverage you need is determined by factors such as the value of your home and contents, the location and age of the home, as well as the risk you pose to the insurer.
Home insurance policies in Ontario typically offer three or more types of coverage: dwelling, contents, and personal liability.
Common risks like fire and theft are typically covered by standard policies. If you have unique needs or valuables that require extra coverage, you can look into getting additional coverage.
Dwelling: Home insurance covers damage or loss to the dwelling you live in: house, apartment or condo. There are events and occurrences that may put your home at risk and these are known as ‘insured perils’, and standard home insurance policies apply these to your dwelling and contents.
Insured perils include things like:
- Fire
- Lightning strikes
- Smoke (if caused by malfunctioning cooking devices or heaters, but not fireplaces)
- Theft
- Water damage (check to see which types of water damage your policy covers)
- Wind
- Aircraft or vehicle impact
- Explosion
- Falling objects (except those caused by earthquake or snow slide)
Not all policies cover the same insured perils, so make sure to go over all the details.
You should also see what insured perils are more likely to occur in your area as these can affect your premiums. For example you may live in an area prone to flooding, earthquakes or wildfires.
Contents: This coverage insures your possessions against theft, damage or vandalism, and typically covers all of the items you own such as furniture, clothing, electronics, sports equipment and toys.
Not all the coverage is the same; insurance companies have their own contents coverage limit on specific items, so be sure to get one that best suits your needs.
For more valuable items, you will need to purchase extra coverage to protect things like expensive jewellery, high-end electronic equipment, antiques and valuable art.
Personal liability: This coverage protects you against being held responsible for any legal and medical costs if anyone were to get hurt or injured on your property.
It also protects you if you were held responsible for any repair or replacement costs due to property damage. For example, if your condo pipes leak and cause damage to another unit.
Basic home insurance policies offer this coverage, but the amount and type of coverage can differ and will affect your premiums.
Different types of insurance for your dwelling
Just as we live in many different types of dwellings, there are different types of home insurance that cater to all types of living situations. Along with home insurance, there is also condo insurance and tenant insurance.
If you own a condo, or rent a house or apartment, some landlords may require tenants to have tenant insurance before moving in and condo corporations and lenders may require condo unit owners to show proof of insurance before moving in as well.
Let’s look at the other different types of insurance:
Condo Insurance: Condo insurance protects the units within a condo building. You would get it to protect your contents such as appliances, clothing and furniture (and would also cover items stored in a locker).
It would also provide additional living expenses in the event of an insured loss (if you had to temporarily move out) as well as the condo owner’s liability for any bodily injury or property damage that was unintentionally caused by others in the building.
Condo building insurance is different. This is purchased by the condo corporation to cover damage to the building and the common areas, and liability on the property. This is usually included in the monthly condo maintenance fees.
Tenant Insurance: This is also known as renters insurance. It protects the personal contents within the rental unit, such as clothing appliances and furniture, as well as items in a storage locker in the building.
It also provides liability coverage for any unintentional property damage and bodily injury.
If you’re looking to do your own research for coverage, we’ve compiled a list of the top rated home insurance companies in Ontario that we think have the most to offer: Best Home Insurance Companies In Ontario | Surex
