One of the most common questions is home insurance mandatory in Ontario, Canada. This is because car insurance assumes so much that home insurance can be one too.
The short answer is no. No law in Canada requires homeowners to have home contents insurance. But that doesn’t mean it should be neglected.
In Ontario, home, Condo, and tenant insurance are not required by law. However, most banks and mortgage lenders require homebuyers to provide proof of home insurance before transferring the mortgage. Landlords may require tenants to provide proof of tenant insurance before allowing tenants to move in. Housing associations and lenders may require condo owners to provide proof of insurance for their units before they can move in.
Is Home Insurance Mandatory In Ontario?
Is home insurance mandatory in Ontario, Canada? Home insurance is not a legal requirement in Ontario. It is not illegal not to have home insurance. The Ontario government does not regulate home insurance like auto insurance. However, most banks, mortgage lenders, and investors require homebuyers to confirm their home insurance during the closing process before proceeding with financing. The same is true when a homeowner receives an equity line of credit.
However, once all liens and mortgages are paid off, the homeowner can choose to self-insure or add a co-insurance clause to the policy to partially insure the home and self-insure a percentage (e.g. 20%). What happens if you don’t have home insurance, you might be wondering? The homeowner wants to make sure they have adequate collateral in case of a total loss.
Why are mortgage lenders pushing for home insurance?
When a mortgage lender lends money to a homebuyer, they can use the home as collateral for the loan. So if the borrower fails to pay the mortgage, the lender can seize the home and sell it for the money owed. But if the home is damaged or destroyed, the mortgage lender has nothing to protect their money. When the home is insured, the lender is protected.
Types of home insurance
What is homeowners insurance and why is it there?
Homeowners insurance is a type of property insurance that covers private households. It is bought by homeowners to protect the contents of their home and the homeowner’s liability. A typical household contents insurance protects against damage that can result from fire, theft, hail or storms.
Considerations for Homeowners
Owning a home is a huge responsibility, both financially and physically. The saying “there is always something to do in a house” has never been truer. Homes typically require more labour and maintenance than apartments, rentals, or condos. If your home is not properly maintained, your insurance company may choose to cancel or not renew your home insurance, or if you make a claim, they may deny it.
Here are some general maintenance points to consider:
- Monitor your roof and shingles. Roofs generally need to be replaced after 20 years because the shingles are not as effective and water can seep into your home and damage your property and possibly your home’s foundation.
- Look for cracks or leaks in walls, floors, windows, and foundations and make sure they are sealed. Sealing can help prevent water damage and keep your home warmer in the winter and cooler in the summer. Small cracks are often the result of shifting or subsidence of the house, as is the case with all, but larger cracks can indicate more serious problems. Contact a licensed contractor if you are concerned about the cracks in your home.
- Remove leaves and other debris from your gutter and downspouts annually, as these can prevent them from draining properly. It’s best to do this in the spring when there is generally more rainfall in Ontario.
- Maintain your plumbing system. Never rinse away dental floss, cotton swabs, or other personal care products such as tampons or disposable wipes. Never pour oil, grease or grease down the drain. These items can clog your pipes and/or drains and should be disposed of following your local council’s waste disposal guidelines. If your insurer has reason to believe that you caused plumbing problems, they may reject a claim caused by pipe damage.
What is Condo insurance and why is it there?
Condo insurance is a type of property insurance that protects units within an apartment building. It is purchased by Condo owners to protect contents such as appliances, clothing and furniture, and items stored in a locker, and to cover additional living expenses in the event of an insured loss. Condo insurance also protects the condo owner’s liability for personal injury or property damage caused to others by accident. For example, if the ceiling of a downstairs apartment has water damage as a result of the leaking faucet in the upstairs apartment, the owner of the upstairs apartment may have to pay for repairs to the downstairs ceiling.
Condo insurance versus a home insurance
It is important to note that homeowner’s insurance is different from homeowner’s insurance. Building insurance for Condos is purchased by the Condo company to cover damage to the building and the common property of the building, such as hallways, stairs, rooftops, swimming pools, lounges, and conference rooms, garages, driveways, and lobbies, as well as property liability. It also includes the furniture and equipment of the Condo building. Condo insurance is usually included in a condo owner’s monthly maintenance costs.
Condo insurance often does not cover damage or contents within an individual apartment. For example, if a wall in a condo is damaged, the condo building insurance may not cover the damage and it may be the condo owner’s responsibility to repair the wall.
Condo insurance is different for each building as each building has its requirements, needs and risks. When purchasing a condo, you have the right to obtain a copy of the condo insurance policy. Please read it carefully so that you understand what you may need to protect yourself. Some condo companies may ask you to get a certain amount of insurance for your condo. Therefore, make sure you understand the requirements for building apartments. Because condo insurance policies can change from year to year, condo owners must review their home insurance regularly and make sure their condo insurance covers everything else.
An insurance agent or broker can help you understand your Condo insurance and identify the right Condo insurance policies specific to you, your content, your condo, and your condo.
What is tenant insurance and why is it there?
Renter’s insurance, also known as tenant insurance, is a form of home insurance for tenants, i.e. people who live in it but do not own the property. It is bought by renters to protect the personal belongings in their rental and to provide liability insurance. Content can include clothing, appliances and furniture, and items in a storage area.
Landlords can require renters to purchase renters insurance before moving in. While landlords have building insurance for the entire rental building, this insurance does not cover the contents or liability of a tenant.
The tenant’s insurance covers the tenant’s liability for any material damage caused by an accident to the building. For example, if your diner catches fire and causes major damage to your rental home and the adjacent rental home, you are liable. If you have renters insurance, repairs to your rent and adjacent rent are within the scope of the policy.
Tenant liability insurance also covers the tenant’s liability in the event of personal injury. For example, if a guest falls into the renter’s rental property, the renter can pay for any medical care the guest needs. If the renter has renters insurance, the guest’s medical care can be covered within the scope of the policy.
Be sure to speak with a licensed agent or broker to find out which policy is right for your needs and liability, and disclose all content to ensure proper coverage for your property.
Why do you need home insurance?
1. Damage to your home
Your home can be your most valuable asset and insurance protects it from fire, lightning, explosion, smoke, weather, vandalism and theft, as well as other potential sources of damage inside and outside your home. Insurance can also cover living expenses if your home is so badly damaged that it is uninhabitable.
2. Damage to your personal property
If your home has been damaged by something covered by your policy, your property is also covered up to a certain limit. Your personal belongings are also insured when you travel.
3. Personal belongings have been stolen from your car
Items stolen from your car are covered by your home contents insurance.
One reason you may not immediately think of is liability insurance. Home contents insurance includes liability protection if someone is injured on your property and legal action is taken. This applies not only to your home but everywhere. If you are liable for personal injury, you may be covered by your home insurance policy even if it is not in your home.
5. Accidental Damage to Another Person’s Property
If a fire has started in your home and has spread to a neighbour’s home, your home contents insurance will cover the damage to their home.
What is insured in the home insurance?
Home insurance is intended to protect you against unexpected events such as fire and theft. Some events, such as earthquakes and floods, are unlikely to be covered and you should consider additional coverage.
Make sure you choose a policy that fits your needs and understands exactly what it covers.
What is not covered by home insurance?
Foreseeable events and maintenance problems are not insured. Damage that could have been prevented by proper maintenance of your home is not covered. Anything not specifically stated in your policy will not be covered, so be sure to add any cover you deem necessary.
Who is covered?
The contents insurance offers you, your partner and your children protection against private property and liability.
Not having home insurance is a huge risk, and if you’re not happy with your savings covering all possible scenarios of damage to your home or that of someone else or a third party, you’ll need to get home insurance.
Conclusion – Is Home Insurance Mandatory In Ontario, Canada?
Homeowners may need home insurance if they want to get a mortgage. This is not a law, but mortgage lenders can refuse a mortgage application if there is no home insurance. You can also take out a mortgage when the home insurance policy expires.
The bottom line is that anyone who wants to protect their financial investment in their home and property should have home insurance. While not required by law, homeowners should make it mandatory to protect their interests.