Get the best home insurance in Ontario

Home insurance in Ontario

If you own a home in Ontario, you’re not required by law to have insurance. However, most lenders won’t provide a mortgage unless coverage is in place. As a result, most homeowners have it.

Protecting what is likely your largest asset has both financial and emotional benefits. In the event of a covered peril, you’ll be compensated. With that comes some peace of mind. An additional benefit that some overlook is that most home insurance policies also include liability protection. This means that if someone is injured on your property, you will be protected financially.

Climate change and rising damage costs

If neither benefit persuades you, consider the practical reality of home ownership. Homes in Canada are increasingly impacted by damage from severe weather events linked to climate change. The Insurance Bureau of Canada (IBC) reports that in 2023, insured damage for severe weather in the country hit $3.1 billion. In addition to the record-breaking wave of wildfires that year, Ontario also had to contend with severe summer storms, which cost the province $340 million in insured damage. Furthermore, a spring ice storm that hit both Ontario and Quebec earlier that year cost the two provinces $330 million in insured damage.

When looking at the catastrophic losses from 1983 to 2022, as recorded in the 2023 IBC Fact Book, a clear pattern can be spotted – that insurance losses have risen dramatically over the last three decades, both in Ontario and Canada at large.

For instance, from 1983 to 2000, average catastrophic losses in Canada amounted to $440 million per year (loss and adjusted expenses in 2022 dollars). Between 2011 and 2020, those losses rose to the average of $2.3 billion. In 2020 alone, Ontario had to deal with flooding, windstorms and winter storms on two occasions. First, in January, which cost Greater Toronto, Kitchener, Innisfil, New Hamburg and Montérégie, Quebec, $110 million in damages. And later, in November, which cost southern and central Ontario, including Greater Toronto and Hamilton Area, Niagara region, Lake Erie shoreline, Muskoka region and Lake Ontario shoreline, $108 million in damages. In 2022, Ottawa, Greater Toronto, Kitchener-Waterloo as well as Outaouais, Lanaudiere and Laurentides in Quebec lost $1.3 billion in damages due windstorms and other catastrophic events.

Higher home insurance premiums

This means that the protection afforded to you by home insurance won’t come cheap. In Q4 2023, for instance, all provinces experienced an increase in premium rate change year over year, with British Columbia seeing the highest rate increase of all – at 11.1%. Alberta, Ontario, Quebec and the Atlantic Provinces fared a little better, with rate changes of 0.7%, 8.3%, 2.5% and 9.1%, respectively. Even so, Ontario sits on the higher end of this spectrum.

So, what can you do as a homeowner? Your best bet is to be more discerning. When shopping for insurance, avoid buying the coverage you don't need. Here, we outline some of the important details you should consider when choosing coverage that’s right for you and your home.

Types of home insurance in Ontario

Home insurance usually comes in four different flavours, depending on the amount of coverage you’d like to get – or in some cases, allowed to get (as your home may not be safe enough to warrant standard coverage).

These are the coverage types you’re likely to encounter:

• Named perils: Also known as ‘basic,’ this one protects both your dwelling (the building itself) and its contents, but only against the perils listed on the policy. For instance, if the policy lists water damage, but not sewer backup, then the latter will not be covered. Though this is the cheapest coverage you can buy, it’s not recommended for most homebuyers due to how limited it can be.
• Broad form: This coverage is more comprehensive than the basic one, as it protects your dwelling against all perils – except for a handful of exceptions listed on the policy. Your possessions, however, are protected against named perils only, just like they would be under the basic policy. In other words, your dwelling gets full protection, while your possessions get limited protection.
• Comprehensive: Otherwise known as ‘all perils’ insurance, this one protects both your dwelling and possessions against all conceivable perils – aside from a few exceptions listed on the policy. This is the best and most expensive coverage you can buy. In most cases, it should be sufficient – though you can always expand your coverage through add-ons.
• No-frills: This is the most bare-bones coverage you can buy and is not recommended for most homeowners, as it usually only protects your property against a handful of perils (usually fire and nothing else). This coverage is meant for old or damaged homes that are too risky to insure under normal circumstances. Given that such homes are often unlivable, homebuyers typically use no-frills insurance to temporarily protect the home until it is made more insurable.

Home insurance coverage

• Property and building: This coverage protects both the structure(s) on your property, as well as the property itself, from a variety of perils. Protected incidents include fire, theft and water damage, among others. Because some policies may require additional coverage for secondary structures, like a garage or guest house, consult your insurer if anything is unclear.
  
• Contents and personal property: Contents and personal property coverage protects your possessions, such as furniture, clothing and sports equipment, against theft and vandalism. Some items, like fine art and expensive jewelry, may not be protected under a standard policy. Excluded items can be protected with additional coverage.
  
• Additional living expenses: If you’re temporarily displaced by an insurable event, this protection covers your temporary housing costs. For example, if damage to your home forces you to spend a week at a hotel, additional living expenses protection will cover the cost of the room and food, up to a certain amount.

Liability coverage

• Personal liability: This coverage provides protection against liability in the event someone is accidentally injured on your property.
  
• Voluntary medical payments: If you unintentionally injure someone, or someone accidentally injures themselves on your property, this coverage will pay for the medical expenses for up to one year from the date of the accident.
  
• Voluntary property damage: This coverage is for unintentional direct loss or damage you cause to someone’s property. It also covers unintentional loss or damage to someone else’s property by a minor (12 years or under) in your care.
  

Add-ons to home insurance coverage in Ontario

Beyond the standard components of an Ontario home insurance policy, there are additional coverages you can purchase to further protect your home and the contents within.

These are some of the most common home insurance add-ons, also known as riders, that you can add to your home insurance policy:

• Overland water: Although not every carrier offers this add-on, if your insurer does, it covers property damage from overflowing water from nearby rivers, streams, lakes and thawing snow.
  
• Sewer back-up: Protects your home when a main sewer backs up and causes damage.
  
• Earthquake: Covers losses or damage caused by an earthquake. This add-on is especially useful if your home is located in an area that is vulnerable to earthquakes.
  
• Mass evacuation: If an event, like a flood or wildfire, triggers a government-issued evacuation order, this pays for some of the expenses you incur while being away from your home. Note that only covered perils qualify for this coverage. However, you can expand it via add-ons (e.g., by purchasing flood or earthquake coverage).
  
• Identity theft: Covers the cost of replacing important documents, such as your passport.
  
• Lock replacement: If you need to replace the locks on your house, this add-on provides coverage.
  
• Personal valuables: This add-on lets you increase the coverage amount to account for high-value items such as fine art, collectibles and jewelry (in case your regular coverage is not enough).
  
• Home sharing: If you’re looking to rent out your property, this will provide you with the additional property and liability coverage you need to stay protected.
  
• Personal umbrella: If you’re worried that your standard liability coverage isn’t enough (e.g. if your lawsuit costs you more than expected), this add-on can make up the difference.
  

What is not included in a typical home insurance policy?

Even if you have the most coverage money can buy, having opted for every available endorsement, there are some perils against which no policy will protect you. In the insurance world, these are referred to as 'exclusions'.

Common exclusions include:

• Absence from the home: Damage that takes place while you’re away from the home for an extended period of time.
  
• Alterations: A homeowner will only be protected against damage to a property that occurs during an alteration to it if they have received written permission from the insurance provider to undertake the alteration. However, common repairs such as painting or fixing a broken railing are not subject to this exclusion.
  
• By-law enforcement: You are not likely to be covered for costs stemming from the application or enforcement of a bylaw.
  
• Damage from renters: Most insurance providers require specific coverage for landlords. A standard home insurance policy is unlikely to protect you if a renter damages the property.
  
• Deliberate damage or injuries: If you purposely damage your property (whether it’s your dwelling or personal items) or you deliberately hurt someone on your property, your insurance will refuse to cover you. In fact, if you file a claim for either of the two, you may be accused of insurance fraud, which is illegal.
  
• Earthquake: Most policies exclude protection against earthquakes, though you can add coverage in the form of an endorsement.
  
• Existing damage: You’re unlikely to be covered for damage that began before you held the policy.
  
• Flooding: Most policies exclude flood protection, though coverage can be purchased as an endorsement.
  
• Mold: Since mold occurs slowly due to pre-existing conditions, such as extreme humidity, there is usually enough time for you to prevent it. Home insurance isn’t meant for maintenance – it's here to address major perils only.
  
• Pest infestations: Like mold, pest infestations, including mice, bedbugs, cockroaches and termites, are also a maintenance concern. That’s why it’s unlikely that your insurance would cover an infestation if it were to occur in your home.
  
• Volatile substance: If you have more than one gallon of a volatile substance on your property and a fire or explosion takes place, you may be denied coverage. This is likely to include gasoline.

There are also some perils for which no coverage is available. They’re referred to as ‘uninsured perils.’ For example, if your home is built on a known flood plain, no insurance protection may be available.