Your lender will want proof of home insurance before it releases the mortgage money: CMHC reminds buyers that property insurance must be in place on the day the sale closes. Here is what to know before you call an insurer. Facts were checked on October 29, 2026.
Types of policy
- Comprehensive: covers the building and contents against all risks except those the policy excludes.
- Broad: all-risks coverage on the building and other large items, and named perils on contents.
- Basic or named perils: covers only the perils listed in the policy, and costs less.
- No frills: for homes that don’t meet insurers’ standard criteria; fixing the problems can help you qualify for better coverage.
Source: Insurance Bureau of Canada.
Insure the rebuild cost, not the price
The building amount should be what it would cost to rebuild the home if it were destroyed, which can be far from its market value or its tax assessment: land is not insured, and construction costs have risen much faster than inflation. Replacement value pays to replace what was lost with new; actual cash value deducts depreciation. Guaranteed replacement cost pays to rebuild even above the stated amount, if the policy’s conditions are met, so ask what they are. Sources: IBC and FCAC.
Water is where most surprises are
Sudden, accidental water from plumbing, heating or appliances is usually covered. Sewer backup and overland flood (rivers, lakes, heavy rain or snowmelt) are optional add-ons, groundwater seepage usually is not standard, and frozen pipes while you are away more than four days in the heating season are generally excluded unless the home was checked or drained. Earthquake is a separate add-on. The federal government has promised a low-cost flood insurance program for high-risk homes since Budget 2023; as of October 2026 it is still being developed, and no launch date has been announced. Sources: IBC, flooding and insurance and Public Safety Canada.
Liability and living expenses
Liability coverage pays if someone is hurt at your home or you damage someone else’s property, including legal costs, up to the limit. Additional living expenses pay for a hotel or rental and extra costs while your home can’t be lived in after an insured loss; condo and tenant policies cap them.
Condo owners: two policies and the deductible
The corporation’s policy covers the building but not your contents, improvements to your unit or your liability. A unit owner policy covers those, and loss assessment covers your share of a loss to common property beyond the corporation’s insurance.
- Ontario: if you, your tenant or someone living with you damages your own unit, the lesser of the repair cost and the corporation’s deductible is added to your common expenses; a by-law can extend this (Condominium Act, 1998, s. 105).
- British Columbia: the strata pays its deductible as a common expense but can sue an owner responsible for the loss, even without negligence, so check that your policy covers the strata deductible (Strata Property Act, s. 158).
- Quebec: each co-owner must carry liability insurance of at least $1 million in buildings of 12 units or fewer and $2 million in larger ones, and the syndicate can claim its deductible from a co-owner at fault (Civil Code, art. 1064.1 and 1074.2; AMF).
Tenants
Tenant insurance covers your belongings, accidental damage to the rental, injuries to visitors and living expenses within a limit. Under Ontario’s standard lease, a landlord and tenant can agree that the tenant must carry liability insurance; contents insurance is the tenant’s choice. In Quebec, tenant insurance is not compulsory, but the AMF recommends it. Sources: Ontario standard lease guide and AMF.
What your lender requires
Most lenders require you to buy home insurance, name them on the policy and show proof before closing. A loss payee or mortgage clause makes the lender a beneficiary up to what you owe. Mortgage default insurance from CMHC or another insurer protects the lender if you stop paying; it is not home insurance. In Quebec, a lender cannot force you to buy its own insurance product.
Premiums are rising faster than inflation
Statistics Canada’s price index for homeowners’ home and mortgage insurance rose 4.9% in the 12 months to September 2026, against 3.1% for all prices, and 36.9% over five years, against 19.0%. The Insurance Bureau of Canada points to severe weather: insured catastrophe losses were $37 billion from 2016 to 2025, against $14 billion the decade before. Sources: Statistics Canada, table 18-10-0004-01 and IBC.
Tell the insurer everything, and how to complain
Disclose anything that could affect the insurer’s decision, such as a home business, a wood stove or past claims, even if you aren’t asked; otherwise a claim can be refused. If a claim goes wrong, use the insurer’s complaint process and ask for a final written decision. Outside Quebec, you can then go to the free General Insurance OmbudService, whose recommendations are not binding; in Quebec, the AMF offers free mediation. Source: FCAC.
Budget for it
Add the premium to your monthly costs in the affordability calculator and the budget calculator. Condo buyers should also check the reserve fund guide.
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Official source
Financial Consumer Agency of Canada · Home insurance
This guide explains general rules. Confirm your figures with your lender, lawyer, or the official source before you act.