Do I Really Need Home Insurance?

July 28, 2025

Whether you’re buying your first house, upgrading for more space, or downsizing into a smaller place, your home is your haven. Protecting that investment with home insurance should be a top priority.

Do you need to get home insurance? The answer is yes if you have a mortgage on your home. If you’ve paid off your home, insurance isn’t legally required — but is taking on that financial risk worth it?

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In this article, we’ll explain whether home insurance is required, why lenders insist on it, the risks of going without coverage, and why insurance remains one of the smartest financial decisions homeowners can make.

Is home insurance legally required?

No. You can technically own a home without any insurance, as long as you’re not financing it through a mortgage.

However, until a mortgage is fully paid off, lenders require an active home insurance policy that names them as a beneficiary in the event of a major loss such as fire, flood, or structural damage.

Why mortgage lenders require insurance

Your lender has a financial interest in your property. If your home is destroyed by fire or flooding and no insurance is in place, the lender could lose the value of the loan.

By requiring home insurance coverage, lenders ensure the property is protected — even in worst-case scenarios.

Beware of the risks without home insurance

Even homeowners who own their property outright face serious risks without home insurance:

• Damage to your home: Fires, burst pipes, hailstorms, and wind damage can result in repair costs reaching hundreds of thousands of dollars.
• Loss of belongings: Replacing furniture, electronics, clothing, and appliances out of pocket can be financially devastating.
• Liability claims: If someone is injured on your property, you could be held legally responsible without liability protection.
• Temporary living expenses: Insurance can help pay for hotel stays, meals, and rental accommodations if your home becomes uninhabitable.
• Building code compliance: After a major rebuild, older homes often require costly upgrades to meet current building codes — expenses insurance can help cover.

What does home insurance cover?

A typical home insurance policy in Canada includes several core protections:

• Dwelling coverage: Covers the physical structure of your home, including walls, roof, foundation, and attached garages.
• Personal belongings: Protects furniture, clothing, electronics, and other possessions from risks like fire, theft, and vandalism.
• Liability protection: Helps cover medical expenses, legal fees, and settlements if you’re responsible for injury or property damage.
• Additional living expenses: Covers temporary accommodation and related costs if a covered claim forces you out of your home.
• Detached structures: Sheds, fences, and detached garages are typically covered up to defined limits.
• Optional coverages: Additional protection can be added for risks like overland flooding, sewer backup, and earthquakes, depending on your location.

Did you know? You can customize your home insurance policy to fit your needs.

Working with a home insurance expert helps ensure your coverage matches your property, lifestyle, and risk exposure.

To sum it all up

Home insurance is often required by lenders and strongly recommended by professionals. It provides financial protection, peace of mind, and long-term stability when the unexpected happens.

5 FAQs about home insurance

1. Is home insurance required in Canada?

No. Home insurance is not legally required anywhere in Canada, but mortgage lenders require it before approving a loan.

2. What if I don’t have home insurance?

If you own your home outright, you won’t face penalties, but you assume 100% of the financial risk if something goes wrong.

3. How much does home insurance typically cost in Canada?

Premiums vary based on location, home value, building age, and coverage choices. On average, Canadians pay between $800 and $1,200 annually, with higher costs in flood- or earthquake-prone regions.

4. Is condo insurance or renters insurance the same as home insurance?

Condo insurance covers your unit, contents, and liability but not the building. Renters insurance covers belongings and liability only. Homeowners insurance protects the full structure, land, contents, and liability.

5. Can I switch insurance providers if I find a better rate?

Yes. You can switch providers at any time. Just ensure your new policy is active before cancelling the old one to avoid coverage gaps.