Your home is probably your biggest investment, and when damage or loss occurs, it can be emotionally, and financially devastating. Home insurance is a way to protect your home and your possessions against financial loss if they are damaged, lost or stolen. Home insurance can cover living expenses if you are temporarily unable to live in your home due to an insured loss, and most standard policies protect you from financial liability in case someone is injured on your property, or if you cause damage to someone else’s property.
When you purchase a home insurance policy, you agree to pay premiums, and the insurance company agrees to pay for certain losses if they occur. To learn more specifically about home insurance, condo insurance or tenant insurance, visit
Types of Home Insurance.
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Types of home insurance policies
As outlined on the
Insurance Bureau of Canada’s (IBC) website , there are several types of home insurance policy you can purchase. They include:
- “no-frills” policies offering coverage to properties that don’t meet normal insurance standards;
- “standard” policies also known as ‘named perils’ which only cover
insured perils (events and occurrences that may put your home at risk) specifically stated in the policy;
- “broad” policies which are considered the mid-tier policy (more coverage than a standard policy but less than a comprehensive policy); and
- “comprehensive” policies which cover the building, personal liability and all risks.
Speak with an insurance agent or broker to find the policy that suits your needs. To verify that an
insurance agent is licensed in Ontario, visit FSCO’s
Agents Licensed in Ontario. Visit the
Registered Insurance Brokers of Ontario’s website for a list of licensed
Typical home insurance coverage
The amount of coverage you need will be determined by factors such as the value of your home and contents, the location and age of the home, and the risk you pose to the insurer. Home insurance policies typically offer three or more types of coverage, including
personal liability. Common risks like fire and theft are typically covered by standard policies, but you may have unique needs or valuables that require extra coverage. Check with your insurance agent or broker to make sure you have enough coverage.
Home insurance covers damage or loss to the dwelling (actual building) you live in, be it a house, apartment or condo. There are events and occurrences that may put your home at risk. These are known as
insured perils, and standard home insurance policies apply these to your dwelling and contents. This will be clearly stated in your home insurance policy. Insured perils include things like:
- Lightning strikes
- Smoke (if caused by malfunctioning cooking devices or heaters, but not fireplaces)
- Water damage (check to see which types of water damage your policy covers)
- Aircraft or vehicle impact
- Falling objects (except those caused by earthquake or snow slide)
When shopping for home insurance, compare policies carefully to see which insured perils are covered and which are not. Some perils, like “Electrical surge” or “Electrical current” may be defined differently. You should also check if there are any insured perils that are more likely to occur in your area. The insured perils and their limits can affect your premiums, so you need to balance your desired coverage with your budget.
Contents coverage insures your possessions against theft, damage or vandalism. Contents coverage typically covers all of the items you own – furniture, furnishings, clothing, electronics, sports equipment, bicycles, boats and toys. Each insurance company sets their own contents coverage limits on specific items, so shop around for the coverage that suits your needs.
Discuss your needs with an insurance agent or broker, and ask about purchasing extra coverage for valuable items like jewellery, bikes, electronic equipment and art. You’ll need to provide receipts and appraisals for valuable items, and provide model and serial numbers where applicable. It’s a good idea to provide photos and video of the contents of your home. To learn how to take a home inventory, visit
Take Inventory of Your Home.
If someone gets injured on your property, you could be held responsible for legal and medical costs. If your condo pipes leak and cause damage to another unit, you are responsible for repairs and replacement costs. Most basic home insurance policies offer some type of
Personal Liability coverage, and the amount and type of coverage will affect your premiums. Compare policies carefully to determine which liability coverage suits your needs and your budget.
Some home insurance policies may also cover you for liability against any cyber bullying that originates from your property. Be sure to check with your insurance company or insurance representative to understand if this liability is covered in your policy and to what extent.
Uninsured activities, also known as exclusions, are risks which insurance companies will not cover, such as:
- home-sharing activities (for example, if you Airbnb your home, this will require separate insurance and not all insurers offer it)
- criminal activities (for example, if you purposely damage your property to file an insurance claim, it’s fraud.) If you intentionally injure someone on your property, you could be charged under the law, and any insurance claim would be denied.
- moral risk: not taking proper care or disregarding measures to protect your home because you know the insurance company will replace something if it’s damaged or stolen (for example, not installing a smoke alarm because you have fire insurance.)
- business use (for example, running a home-based craft business, accounting or repair services, delivery services, or any side business, no matter how small.)
Optional coverages (endorsements) you may want to consider
A standard home insurance policy will ensure that you are covered for the insured perils listed in your policy. However, some disasters are not typically covered, meaning that you could face expensive repair or replacement costs yourself.
For example, if the sewer backed up into your basement, could you afford to replace everything, including walls, flooring, furniture, and all your possessions? If the ground shifted, could you afford to repair a cracked foundation?
For those events that are not covered in your standard policy, you may want to purchase extra coverage, also known as
endorsements or riders. Common endorsements include:
Flood: also known as overland water, this endorsement covers damage caused by bodies of water overflowing onto dry land. If you live in a flood plain, this coverage may not be available to purchase.
Windstorm: covers damage to the structure of the building, broken windows, damaged contents and cleaning up debris. Water damage from rain and hail may not be covered.
Sewer back up: covers damage caused by backed up sewers, drains, toilets and showers. Sewer back up is not typically covered under standard policies.
Scheduled Personal Articles: if you have valuable items such as jewellery, electronics, fine art, collectibles, bikes or boats, you may need to purchase extra coverage to protect them fully. You need to provide current appraisals to the insurer in order to get the right amount of coverage.
Equipment breakdown: covers unforeseen breakdowns (not general wear and tear) in major pieces of equipment like laundry and kitchen appliances, heating and air-conditioning systems, security systems and computers.
Guaranteed Replacement Cost: ensures that you receive the full amount needed to repair your home or replace contents, without any reduction for depreciation, to the limit insured. Most standard policies pay out an
Actual Cash Value which is determined by subtracting the depreciation value from the
Replacement Cost Value.
Earthquake: earthquakes are not included in most standard policies; however, if an earthquake caused a fire, the fire damage would be covered. An earthquake endorsement insures against earthquake damage, and may also entitle the homeowner to additional living expenses if they are unable to live in the home.
Umbrella policy: your home and auto insurance policies may not fully cover the costs of a lawsuit or claim against you. An umbrella policy can cover expenses outside the limits of your other policies. Not all insurance companies offer umbrella policies, so speak to an insurance agent or broker to see if it’s an option you should consider.
Common activities that could affect your coverage
Your home insurance policy is designed for you based on information you provide about your home, contents and activities. Most standard policies list policy conditions which you must fulfill to maintain coverage, and if you break the conditions, your actions can affect your coverage. This could mean your insurer refuses your claim or your home insurance policy becomes void. If you engage in the following activities, your insurer may deem this as increased risk to your home:
- Renovations: adding square footage, additions, upgrades or swimming pools can substantially change the value and risk of your house. Inform your insurance company of any renovations to ensure that you have adequate coverage.
- Being away for long periods of time without someone checking on your house: if you’re away for an extended amount of time (check the specific time frame in your policy), make sure someone is checking on your house. If you’re away in the winter, you should also drain your pipes to make sure they don’t burst while you’re gone.
- Not maintaining your house: if you don’t maintain your house and complete repairs as needed, any resulting damages may not be covered by your insurer. For example, if you don’t replace missing roof shingles, and as a result, get water damage in your walls, that damage may not be covered.
- Starting or running a home business: home insurance is not business insurance. Losses that result from business activities, as well as losses to the business itself (damaged stock, inability to use the work space) will not be covered under your home insurance policy. Disclose all home business activities, no matter how small the business is, and make sure you have coverage for those activities.
When purchasing home, condo or tenant insurance, it is important you disclose information about your home and its contents to your insurance agent/ broker or company to ensure you have adequate coverage. While you may think that disclosing certain information could raise your premium, it actually provides better protection for your home and its contents when there is loss. If information is not disclosed and a loss occurs, your home insurance company may deny your claim or void your policy, leaving you with the full cost of repairs or replacement.
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