The Ultimate Guide to Property Insurance in Canada

Property insurance policies include various options for liability or property protection. Examples of property insurance packages include homeowner’s insurance, renters, condos, mobile homes, commercial, and flood insurance. This guide reviews several types of property insurance options available in Canada.

Property insurance terminology

Before considering several property insurance options, let’s compare a few related terms commonly used when describing property insurance offers.

Property insurance vs. homeowners insurance

Property insurance is a generic term that includes several types of insurance policies. A homeowners insurance policy is a subcategory of property insurance that provides insurance offerings for your house and belongings.

Property protection coverage vs. personality liability coverage

Property protection (or property insurance) provides coverage for the structure of your home and belongings. Personal liability is a coverage you can use when you are legally responsible for damage to someone else’s property or if you accidentally injure someone.

Franchise vs. ordinary deductible

Franchise deductibles are the minimum loss incurred before you can access insurance coverage. The difference between a franchise deductible and a regular one is that in the case of the former, the entire amount of loss is paid when the value threshold is reached.

Replacement cost insurance vs. actual cash value insurance

A replacement cost insurance pays for the total replacement cost of your damaged/lost belongings. An actual cash value insurance provides payment for the depreciated value.

In both cases, you might have to pay a deductible. Also, there will be a limit in terms of the maximum amount the policy will pay for a loss.

Homeowners Insurance

Homeowners insurance provides coverage for your house and your belongings. Depending on your insurance plan, you might be able to use the homeowner’s insurance for several items. Such as clothing, furniture, and appliances.

Homeowner’s insurance protects what, for many, is their most important investment – their house. For this reason, choosing the right insurance policy for your home might be the most important choice. It is best to compare home insurance provider quotes to ensure you will get the most convenient insurance option.

There are three main categories of homeowners insurance:

• Basic
• Broad
• Comprehensive.

A basic coverage offer will provide you with a list of everything covered. In contrast, a complete coverage offer lists everything that the insurance does not cover. Broad coverage offerings usually include coverage for home structure and personal belongings besides what they offer in the basic coverage plan.

A basic homeowners insurance plan will usually not include coverage for events such as natural flooding, earthquakes, or animal-caused damages. Insurance providers often allow those living in high-risk areas for specific events to personalize their policy according to their needs.

A homeowner insurance policy protects you from accidents at your property. Typical damage property types covered by standard homeowners insurance include fire, hail, wind, and water damage.

As well as personal items, furniture, clothing, dishes, and appliances. Homeowner insurance will not provide coverage for home-sharing activities (e.g., Airbnb), property neglect, or business use.

Homeowners insurance plans also include personal liability and medical care. Examples of personal liability expenses include medical or property damage to others caused by you or other household members.

In case of a lawsuit, personal liability coverage can reduce your expenses. Medical bill coverage includes payments for minor injuries to others who get hurt on your property while visiting.

Optional insurance options are known as endorsements or riders. Commonly-requested endorsements include

• Flood
• Sewer backup
• Windstorms
• Equipment breakdown
• Personal articles
• Earthquakes
• Guaranteed replacement costs.

Those with expensive jewelry may want additional protection for their belongings, as standard packages provide coverage for stolen jewelry worth up to $2000. For example, you may wish special coverage for wedding bands, engagement rings, or diamond bracelets.

If you have a child under 12, you may also want to pay attention to voluntary property damage insurance.

With this option, the insurance will pay damages caused by your child to a neighbour’s property. In most cases, this option will provide coverage in the range of $500 to $6000.

Renter’s Insurance

Some renters may wrongfully assume their landlord’s insurance policy is all they need. This is, however, not necessarily the case. The landlord’s insurance policy does not provide coverage for the renter’s items or their liability.

A renter’s insurance policy will protect your belongings against events that include fire, vandalism, windstorm, smoke damage, windstorms, and others. Most renter’s insurance policies cover items: appliances, furniture, electronics, and clothing.

A renter’s insurance policy will also protect non-intentional damages to someone’s else property, expenses resulting from inhabitability of the property, and medical expenses or legal fees in case an injury takes place at your residence.

Renter’s insurance provides three categories of protection: content insurance, liability insurance, and additional living expenses. A contents insurance will cover your belongings if a disaster or theft damages them.

You may want to consider at least $20,000 coverage for basic items such as TVs, furniture, and electronics. Choosing a more expensive premium may be a good idea if you have expensive items such as jewelry or art collections.

Liability coverage can save you a significant amount of money if someone sues you for property damage resulting from flooding, fire, or other events. Liability coverage also protects in case someone injures themselves in your rented house.

Additional living expenses coverage can come in handy in case of a disaster. For example, you might need to rent an apartment while workers are repairing yours. Especially if you have difficulties finding one at the same price.

A typical renters insurance will not provide coverage for subletting a space. For this reason, if you provide services such as Airbnb, it’s worth knowing that under the renter’s insurance, you will not get coverage for anything that happens while you are subletting your place.

If you share a home and want renters insurance, you have two options to consider. One option is to get an insurance policy that provides coverage for all sharers’ items. In this case, the insurance might cover your belongings only when damage or theft occurs in your room.

Generally, a policy that provides coverage for all sharers’ belongings will have more exclusions than a typical renter’s insurance policy. Alternatively, you can use a policy that provides coverage for the possessions in your room. The insurance provider must know that you’re in a shared home.

One important advantage of renter’s insurance is that it provides coverage for your items. Even while they are located at a different location. For example, the insurance still covers you if someone steals your phone while travelling.

Finally, before entering a rental contract, it’s probably best to ask your landlord about their insurance coverage and whether he requires you to have renter’s insurance.

In case you are not, it’s best to carefully consider whether you need one or not. Especially if you have high-value items and you want to protect your investment.

Condo insurance

Condo insurance policies are similar to homeowners insurance policies. This type provides coverage for your property and its items.

This insurance differs from homeowners insurance in that the former is meant to be used by those who have a single house. For example, homeowners insurance provides more coverage than condo insurance because homeowners are responsible for the entire property, including the house’s structure.

With condo insurance, you can protect your items or the interior of your condo unit. For example, condo insurance protects you against water damage, theft, fire, or lightning expenses. In addition, a condo insurance policy will help you save money if you have safety devices such as deadbolts or alarm systems.

Before deciding whether you need a condo insurance policy, you may want to check what your condo association’s master policy covers, as the two types of policies complement each other.

When you navigate through condo insurance policy offers, you will likely come across some terms that are not familiar to everyone, including dwelling coverage, loss of use coverage, and loss of assessment coverage.

Dwelling coverage refers to the coverage given to protect the structure of the condo unit and the upgrades you made to it. The level of dwelling coverage you need will depend on what the condo association’s master policy already covers.

For this reason, it is important to determine whether you need to include dwelling coverage or not. You should base this decision on what the condo’s master policy covers.

Loss of use is the coverage provided for additional living expenses. For example, suppose your home becomes unlivable for a while. In that case, you may need to stay at a hotel or temporarily rent another property.

Finally, you can use a loss of assessment coverage to pay for the costs not covered by the master policy after the condo’s shared spaces, or the building exterior is damaged.

Personal items typically protected by a condo insurance policy include furniture, electronics, clothing, and jewelry. You also get protection for things within the condo unit’s interior, including interior walls, hardwood flooring, and cabinets. The association’s master policy insurance typically only provides coverage for structures outside the unit.

All condo policy plans include personal liability coverage. This coverage includes injury or property damage and medical payment for visitors who get injured on your property.

The damages covered by a condo insurance policy include:

• Windstorms
• Fire
• Lightning
• Explosions,
• Vehicle damage (not your own)
• Vandalism
• Aircraft damage
• Riots
• Falling objects
• Theft
• Freezing
• Weight of ice or snow,
• Short circuit damage
• Accidental discharge of water or steam
• Smoke damage.

Depending on where you live, you may want to consider additional condo insurance coverage not typically included in a basic plan. Additional options include flood insurance, second home insurance, earthquake insurance, water backup coverage, and second home insurance.

Mobile home insurance

Mobile homes have specific features and vulnerabilities and, as such, do not qualify for homeowners insurance. Manufactured home insurance or mobile home insurance provides coverage for mobile property, personal belongings, and land structures for events that include fire, hail, wind, theft, water damage, and visitor injury, among others. Most mortgage lenders require mobile or manufactured insurance policies.

The basic package of a mobile home insurance policy usually provides coverage for furniture and clothing, electronics and appliances, unattached structures such as sheds, medical expenses, and/or legal fees if an injury occurs on your property.

Mobile home insurance policies also provide additional living expenses coverage, which includes financial assistance if you need to be out of your home due to a claim. Insurance providers offer the option to increase coverage limits if needed.

Suppose you have sports equipment or musical instruments stored at your mobile home. In that case, you can take advantage of optional coverage, including payments for loss or damage of such items.

Other additional coverage you can consider includes jewelry, floor, identity theft protection, earthquake coverage, and extended water coverage. Some will also find use in optional coverage packages for transportation and emergency removal expenses.

When choosing a coverage limit for repairing or replacing your mobile home’s structure, you should consider whether the amount is high enough to allow you to fully replace the mobile home in case it is entirely destroyed. You can buy extended replacement coverage when rebuilding costs are higher than expected.

A mobile home insurance policy will usually not provide coverage for flooding, wear and tear, earthquakes, animal damage (including insect damage), and damage caused by the use of the property for business purposes. If you live in an area at high risk for particular events (e.g., flood), it may be best to buy extra coverage for the risk factor in question. Getting insurance for high-risk events is arguably a more important consideration for mobile homeowners, as this type of property is more vulnerable than traditional homes.

Borrowing your mobile home can affect your insurance. If the property is in a mobile home park, you want to check if they allow renters or non-owners to use your home. They may not do so if the insurance provider has regulations against borrowing.

Suppose you want to borrow your mobile home. In that case, you need to notify your insurance consultant, who will, in turn, advise your insurance company. If the insurance company allows it, your coverage will change to a rented dwelling, meaning you will have new rates and coverage.

Landlord insurance

A landlord insurance policy protects your property/s for damages to the residence. These policies include coverage for townhouses, condos, and single-family homes. In some cases, they also cover for loss of rent in case of a covered claim.

A landlord insurance policy will cover structure damage, landlord furnishing, appliances, liability situations, and out-of-pocket expenses. Examples of personal protection coverage include lost rent payments in case of property repairs needs and liability coverage if someone gets injured while located on the property.

Optional coverage for landlord insurance policies will usually consist of vandalism damage coverage, construction expenses coverage after the property has been damaged, and water damage coverage.

A landlord insurance policy can be a good option if you are responsible for an entire building, including its exterior. However, in case you do not own an entire building, there are other options you can consider, such as a condo insurance policy or a renters insurance policy.

Suppose you want to rent a location for a short period. In that case, you may need a commercial insurance policy instead of landlord insurance.

When renting out a section of the home where you live, additional coverage added to your homeowner’s policy can come in handy. Extra coverage options you should consider are water backup coverage, flood damage coverage, earthquake damage coverage, and property and wear and tear coverage.

Commercial insurance coverage

Commercial insurance describes several insurance products designed to help businesses protect themselves from losses resulting from different events. One such product is commercial property insurance.

In broad terms, commercial property insurance will provide coverage for the business buildings, income, and personal properties of the business, among others. The properties you can insure with such a policy include

• Business equipment
• Office furniture
• Inventory,
• Computers and electronics
• Customer property located at the business site
• Windows
• Lighting systems
• Fencing and landscaping,
• Outdoor sites
• Tools and equipment used off-site for business purposes or in transit.

A business insurance policy will include coverage for protecting the building and its content. Insurance coverage options for businesses include

• Flood endorsement
• Earthquake shock endorsement
• Sewer backup endorsement
• Sign floater form (adds actual cash value coverage for exterior signs, street clocks, antennae, etc.)
• Cargo floater broad form (provides coverage when paid to transport property belonging to other people)
• Tool floater broad form (coverage for tools and equipment)
• Contractor’s equipment floater broad (coverage for the equipment of contractors),
• Etc.

Depending on your business needs, it can be a good idea to add additional coverage options, including replacement cost endorsement, by-law endorsement, and consequential loss endorsement. A replacement cost endorsement changes the basis of settlement to pay for losses according to the repairing cost or replacing the insured buildings/contents without deductions for depreciation.

Bylaw endorsement is coverage for costs resulting from repairing or rebuilding a damaged property to comply with zoning laws or by-laws when the causes of damage are covered by your policy.

A consequential loss endorsement provides coverage for stock spoilage when the cases of damage or loss are due to changes in temperature or humidity, including caused by off-premise power issues.

A property insurance package will not always cover all the property, meaning purchasing add-on property coverage to get coverage for items not included in the basic package might be necessary. You can also consider income, crime, boiler, machinery, tenant, builder risk, and law insurance.

Flood insurance coverage

Overland flood usually results from storms, dam failure, runoff from melting snow, and tidal flooding. Getting flood insurance coverage is a good idea if you live in an area at high risk for floods unless this event is already covered by a homeowners insurance policy.

In such high-risk places, insurance might be required by your lender. Unfortunately, most homeowners insurance policies do not include coverage for flood damage.

When familiarizing with flood insurance options, it’s important to note that several types of water-related losses are covered not by flood insurance but by other policies. One example is sewer backup, which can occur when sewer systems get an influx of water from rainstorms or snowmelt. The freshwater or wastewater backs up into a home through drains or toilets. Homeowner’s insurance policies will usually provide coverage for sewer backup.

Water damage is another type included in most homeowners insurance policies and is not necessarily covered by flood insurance. Water damage refers to events where the water flows into the property due to causes unrelated to sewer backup or flooding (e.g., windstorm ripping a roof off a structure, pipe bursting, etc.).

When it comes to flooding, insurance companies usually differentiate between tidal flooding and overland flooding. Tidal flooding occurs when your home gets flooded by a tidal wave or a tsunami. Most companies in Canada do not have coverage options for tidal flooding.

Overland flooding is the damage produced by water coming from rivers, lakes, or oceans. Your flooding insurance will usually only provide coverage for overland flooding.

While standard home insurance will provide coverage for sudden bursting of pipes and water main breaks and a flood insurance policy will protect your home in case of an overland flooding, you will need a comprehensive or all peril coverage for damage to vehicles due to flooding or rising water by rain, thunderstorms, or hailstorms.

A flood insurance policy will cover cabinets, appliances, flooring, carpet, heating, air units, and electrical and plumbing systems. These policies will not usually cover damage to retaining walls and decks, valuable papers and money, and swimming pools. Coverage may be limited in the basement and might only include items such as furnaces, washers, and water heaters.

If you live in a condo, you will probably only need flood insurance if your unit is lower. Similarly, you may want flood insurance if you rent an apartment at a lower level, as the landlord’s insurance will not provide coverage for your belongings.

Suppose you consider buying a flood insurance policy because of a flood risk forecast. In that case, it’s worth knowing that most floor insurance providers require a 30-day waiting period before the coverage is effective.

Bottom line: property insurance provides property protection and liability coverage

Property insurance is an umbrella term for policies providing property protection and/or liability coverage for property owners. It includes homeowners insurance, renters insurance, condo insurance, mobile home insurance, landlord insurance, and flood insurance.

Property insurance policies have two key things in common:

1) they provide financial reimbursement to the owner/renter of a property and its contents in case of damage or theft

2) they provide financial reimbursement to someone other than the owner/renter if that person is injured while on the owner’s or renter’s property.

Choosing a property insurance policy can affect your finances for years. As such, it’s probably best to compare the offerings of several insurance providers and even consult with a financial expert if you do not feel confident you can make the right choice.

Frequently asked questions about property insurance