Do I Really Need Home Insurance?

July 28, 2025

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

Do you need to get home insurance, though? The answer is yes if you have a mortgage on your home. If you’ve paid off your home, insurance isn’t required but do you want to take that financial risk?

Get a Home Insurance Quote

In this article, we’ll break down whether home insurance is required, why lenders want it, what risks you take without it, and why having a home insurance policy is one of the smartest financial decisions you can make.

Is home insurance legally required?

No. You could technically own a home without any insurance at all, provided you’re not financing it through a mortgage.

Until the mortgage is fully paid off, you’ll be required to maintain an active home insurance policy that names your lender as the beneficiary in case of a major loss like fire, flood, or structural damage.

Why mortgage lenders require insurance

Your lender has a financial stake in your property. If your home burns down or floods and there’s no insurance in place, the lender risks losing the entire value of the loan. By requiring insurance, they ensure that the money they’ve lent you is protected, even in the worst-case scenario.

Beware of the risks without home insurance

Even if you own your home outright, skipping insurance leaves you vulnerable to a number of financial and legal risks:

• Damage to your home: Fires, burst pipes, hailstorms, or wind damage can lead to repair bills in the tens or hundreds of thousands of dollars. Without insurance, that’s all on you.
• Loss of belongings: Imagine replacing everything in your home—from electronics and furniture to clothing and appliances—on your own dime.
• Liability claims: If someone is injured on your property, you could be held legally responsible. Home insurance typically includes liability coverage to protect you in these situations.
• Temporary living expenses: If your home becomes uninhabitable, insurance can cover hotel stays, meals, and rentals while it’s being repaired.
• Building code compliance: Older homes often need upgrades to meet current building codes after a rebuild. Insurance can help cover those costs.

What does home insurance cover?

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

• Dwelling coverage: This protects the physical structure of your home, including the roof, walls, foundation, and attached structures like garages.
• Personal belongings: Your furniture, clothing, electronics, and other possessions are protected from events like fire, theft, and vandalism. Some policies also cover belongings when they’re temporarily outside your home, like on vacation.
• Liability protection: If someone is injured on your property or if you accidentally cause damage to someone else’s property, your insurance helps cover medical bills, legal fees, and settlement costs.
• Additional living expenses: If a covered claim forces you out of your home temporarily, insurance will help pay for a place to stay and related costs.
• Detached structures: Sheds, fences, and detached garages are typically covered up to a certain limit.
• Optional coverages: You can also add coverage for events not included in standard policies, such as overland water (flooding), sewer backup, and earthquakes—depending on where you live in Canada.

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

To sum it all up

Home insurance is often required by lenders and recommended by professionals. Having home insurance gives you financial protection, peace of mind, and stability when the unexpected happens.

5 FAQs about home insurance

1. Is home insurance required Canada?

No, home insurance is not legally required anywhere in Canada, but mortgage lenders will make it a requirement before finalizing a loan.

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

If you own your home outright, you won’t be penalized, but you take on 100% of the financial risk if something happens.

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

Home insurance premiums vary depending on your location, the value of your home, the age of the building, and your coverage selections. On average, Canadians pay between $800 and $1,200 per year, or more, for home insurance. Homes in flood- or earthquake-prone area usually pay more.

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

Condo insurance covers your individual unit, contents, and liability, but not the building itself. Renters insurance only covers your personal belongings and liability. Homeowners insurance, on the other hand, protects the full structure and land you own.

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

You can switch your home insurance provider at any time. Just make sure you avoid a coverage gap by setting up your new policy before cancelling the old one. If you’re switching mid-term, you may need to pay a cancellation fee, but the savings could still outweigh the cost.