Last updated : August 2025
Your credit score influences more than just your ability to secure loans or obtain favourable credit card terms. In Ontario, it can also impact your home insurance premiums. While home insurance rates primarily reflect the value of your home and the coverage you select, insurers often consider your credit score or more specifically, your insurance score to assess your risk profile. A higher score could mean lower premiums, while a lower score may limit your access to discounts.
Home insurance providers in Ontario typically do not use your standard consumer credit score. Instead, they use an “insurance score,” which is based on similar credit report data but serves a different purpose.
Definition: An insurance score is a number calculated by insurers to predict the likelihood that a policyholder will file a claim. It does not assess your creditworthiness in terms of repaying debt but rather estimates potential insurance risk.
Calculation: Your insurance score considers many of the same elements as your regular credit score. These include your payment history, outstanding debts, length of credit history, types of credit in use, and recent credit applications.
Correlation with Claims: Insurance companies believe there is a statistical link between how people manage their finances and how likely they are to file claims. Individuals with responsible financial habits may also maintain their properties more diligently and avoid preventable losses.
Importantly, this process involves a soft credit check, which does not affect your credit score or appear on your credit file in a way that influences future loan or credit applications.
In Ontario, insurers are allowed to consider credit scores when underwriting home insurance, but strict rules govern how this data can be used. These regulations aim to protect consumers and ensure fairness:
Consent Is Required: Insurers must obtain your explicit permission before accessing your credit data. Without your consent, no credit check can take place.
No Sole Denial or Cancellation: A poor credit score or limited credit history alone cannot result in a denial of coverage or policy cancellation. Other factors must justify such decisions.
Transparency Obligations: Insurers must be clear about how they use credit data and explain its impact on your premiums.
Not the Only Factor: Credit scores cannot be the sole basis for setting premiums. Other elements such as your claims history, location, and the physical condition of your home carry significant weight.
Often Used for Discounts: Most insurers use insurance scores to offer discounts or competitive rates to those with higher scores, rather than penalizing those with lower ones. This rewards responsible financial behaviour without disproportionately affecting those who may face challenges.
These regulatory measures strike a balance between helping insurers assess risk and safeguarding consumer rights.
If you choose to allow your insurer to access your credit information, a strong insurance score may work in your favour.
Potential Savings: Higher insurance scores may unlock lower premiums or qualify you for discounts that reduce your overall annual costs.
Payment Plan Access: A better score could improve your eligibility for more flexible payment plans, such as monthly installments.
Broader Risk Profile: While your insurance score is not the only factor under consideration, it contributes to the full risk assessment used by insurers to determine rates..
Refusing to provide consent for a credit check will not result in a denial of coverage. However, it could mean missing out on the most competitive pricing. In such cases, working with a home insurance broker can help you find the best available options despite limitations.
The use of credit information in insurance underwriting has raised concerns, especially around fairness. Life events such as illness, job loss, or divorce can harm a person’s credit score—through no fault of their own. Relying on credit data could disproportionately affect individuals facing temporary hardship.
In response, industry bodies such as the Insurance Bureau of Canada (IBC) have introduced voluntary guidelines to promote responsible practices:
These voluntary codes reflect the industry’s recognition of public concerns and its efforts to maintain fairness and transparency in how credit data is used.
If you are concerned about your credit score’s impact on your home insurance, there are proactive steps you can take:
Check Your Credit Regularly: Obtain free reports from Canada’s major credit bureaus to catch any errors and monitor your credit health.
Adopt Healthy Financial Habits: Paying bills on time, reducing debt, and managing credit responsibly will improve your credit score over time.
Compare Quotes: Different insurers weigh factors differently. A broker can help you shop around to find a company that offers the most favourable terms based on your situation.
Ask About Discounts: Beyond your insurance score, insurers often offer savings for bundling home and auto policies, having no claims history, installing alarm systems, or remaining a long-time customer.
There are many factors that can influence your Ontario home insurance, including its coverage and premiums. When you understand these factors, it makes it much easier for you to select an insurance that fits your unique situation without hidden terms and conditions. We are a team of professional home insurance brokers specializing in helping property owners find the best insurance for their homes, condos, rented dwellings and secondary homes.
We evaluate the existing policies, financial state and needs of our clients to understand their requirements. Then, we use this information to comb through the top insurance providers and select the best coverage for our clients. We can provide you with extensive coverage at the best possible rates.
Posted Jul 4, 2019