How much is home insurance?

Although home insurance is not mandatory by law in Canada, many lenders will require proof of insurance at the time of signing or renewing your mortgage. You may wish you could forgo this expense, but the truth is having home insurance protects you from having to dole out a large amount of money all at once, especially when it’s unexpected. If you’re looking to get insured, you should review and compare home insurance quotes from different insurers. 

How much does home insurance cost?

The average cost of home insurance in Canada is $960 per year (equal to $80 per month), according to Ratehub.ca, an aggregator website. (Ratehub.ca is owned by Ratehub Inc., which also owns MoneySense.ca). 

The cost of insurance can vary significantly from one province to another. For example, home owners in Ontario pay an average of $1,250 a year (or close to $105 per month) for coverage. That’s quite a bit more than in the Maritime provinces, but only slightly higher than in Saskatchewan. Meanwhile, in British Columbia, the average cost of home insurance is $924 per year. 

“Home insurance premiums are based upon the likelihood of someone suffering a loss and how substantial that loss is likely to be,” explains Stefan Tirschler, product and underwriting manager at Square One Insurance Services in Vancouver. 

Here’s an overview of the average cost of home insurance across every Canadian province, according to data from Ratehub.ca. (No data available for the Northwest Territories, Nunavut and Yukon.)

How home insurance premiums are calculated

How much you will pay for home insurance depends on several factors, including the specifics of your dwelling, your geographical location, the amount of coverage you need and who your insurer would be. 

The bigger and more valuable your home, the higher your premiums will be. (It makes sense that it would cost more to insure a massive estate than a small townhome, right?) Home insurance coverage works the same whether you have a small house or a mansion. The difference is in the cost of replacing or fixing the home, so additional features, like a pool or a wood fireplace, can add to the cost. 

Depending where you live, your home may be more susceptible to certain risks, such as weather-related damage—say, if you live near a coastline, where overland flood insurance is a good idea. This, too, will increase your premiums. Similarly, the age and nature of key components of your property, like the plumbing, electrical wiring and roof, can also affect your insurance rate.

Then there’s the amount of coverage you need. Contents insurance, for example, covers your personal items and belongings against fire, smoke and water damage, theft, vandalism, windstorms and hailstorms and falling objects. Typically contents coverage is included unless you only have a basic or no-frills policy. For any items that are more expensive or harder to replace—say, jewellery or musical instruments—you may want to pay more for extra coverage. 

Finally, you have a role to play. Every insurer has its own way of determining risks and calculating premiums, meaning you can easily get a range of home insurance quotes for the same amount of coverage. Many providers try to be competitive with pricing, so there are often deals to be had—if you take the time to shop around.

Basic vs comprehensive plans: What’s the difference?

If you buy a basic home insurance plan, you’ll typically receive a pared-down package that includes protection for a few specific events. Fire, wind damage and theft are usually included. Protection from events like flooding or earthquakes are usually available as add-ons for an additional cost. With basic coverage, anything not specifically detailed in your policy is not covered, so it’s crucial to go over every eventuality with an agent. 

Broad home insurance coverage comes at a greater cost, but covers all risks except those named as exclusions in your policy. Broad policies are similar to comprehensive policies—which offer the most coverage of all—with the exception of contents insurance. A broad policy only covers your contents against named perils, whereas a comprehensive policy covers your contents against anything except for named exclusions, like flooding, sewer backup and earthquakes. 

“In terms of whether you require contents insurance, the answer is pretty simple,” says Tirschler. “If you have personal belongings, and you couldn’t afford—or wouldn’t want—to use your own financial resources to buy everything again in the event of a serious loss, then you need contents insurance.”

Lastly, you’ll want to consider accidents for which you can be legally held liable. 

“With any insurance policy you’re buying a scope of coverage,” says Scott Hawryliw, a civil litigation lawyer at Stewart Esten LLP in Barrie, Ontario. He explains that home owners have to consider liability. “You have to look at the limits of your policy. Think of a slip and fall. Or if your dog bites someone. Do you want a little coverage on that? Or a lot?” 

Does where you live affect your insurance premiums?

Is there a price difference between home insurance in Ontario and home insurance in British Columbia? There most certainly is. Where you live in Canada will have a bearing on your premiums, but it’s not as simple as looking up rates in your province. 

While it’s true that rates in Ontario are generally higher than rates in B.C., home insurance quotes do get a lot more specific than that. The precise region, city and neighbourhood you live in can affect your premiums. A home in a dense urban area of Toronto, for example, may be seen as more of a risk than a home in the Ontarian countryside, so the insurance rate might be higher. On the other hand, if the house in the country is in an earthquake zone, the home owner may need to pay for additional earthquake coverage. 

Things you can do to lower the cost of your home insurance

Many of the factors that affect home insurance rates are out of an individual’s control, but not all of them are. If you’re looking for ways to maximize your coverage or reduce your premiums, here are some tips to keep in mind. (Read more on how to lower your home insurance premiums.)

1. Check your history of insurance claims
   Just like with other forms of insurance, your home insurance premiums will likely increase every time you make a claim. Note: Should you make too many claims, certain insurers may refuse to cover you.
   “If you have a claim like a basement flood, you might give some thought to the value,” Hawryliw says. “You have to think: Do we clean this up and make do or put in a claim where it drives the rates up? How serious is it?” If the repairs are low cost, it may be worth handling these on your own. 
2. Notify your insurance provider of upgrades
   If, as a homeowner, you can reduce the “perceived risk” to your home, you may be able to shave off some of the cost. A new roof, for example, will reduce the likelihood of water damage, says Tirschler, adding that “other protective features, like sewer backflow valves and sump pumps, can also help reduce the premium charged by some providers.” In general, keeping a well-maintained home is beneficial to you and your premiums.
   That said, you should always speak with your insurance agent or broker. “If you’re thinking of purchasing or installing a protective system for your home, check with your home insurance provider first to get an idea of whether, and how much, it will influence your premium,” Tirschler cautions. “Not all home insurance providers offer the same discounts. And it could be frustrating to expect a discount for an expensive protective system, only to learn that your home insurance provider does not offer such a discount.”
   Typically you can get a 5% discount for a third-party monitored alarm system, excluding “smart” doorbells or home systems.
3. Switch policies or even insurers
   As with any other kind of insurance, it pays to shop around for home insurance quotes. Find out what’s included in a basic package and the cost of various add-ons.
   Home insurance is there to protect you and your home. With some research you can build a package that meets your needs without breaking the bank. 
4. Bundle your insurance
   If you have car insurance, find out if there are discounts for holding your home insurance with the same company, and ask if paying the entire annual amount at once nets you any savings.
5. Consider paying annually
   If it’s feasible, paying your premiums in a single lump sum for the year, instead of paying monthly, can result in added savings.

Read more on home insurance: 

• Buying home insurance in Canada: A beginner’s guide
• “I discovered water damage in my home. Will insurance cover me?”
• Is my house covered if I’m not living there? Vacant home insurance, explained
• Why your home insurance rates are rising

About Keph Senett

Keph Senett writes about personal finance through a community-building lens. She seeks to make clear and actionable knowledge available to everyone.