Is Ontario Home Insurance Mandatory?

Apr 20, 2022

It’s understandable that auto insurance is mandatory in Ontario. You’re on the road, and therefore, there is greater liability and higher chance of accidents. But what about insurance for where you live? It’s not always clear whether home insurance is mandatory in Ontario. The answer to that question actually depends on whom you’re asking it is mandatory for.

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Not Mandatory by Law

In Canada, there is no law that requires you have to have insurance on your property, whether you own a house or a condo, or rent an apartment. Because of this, home insurance is often overlooked when it comes to protecting everything you love and cherish. You work hard to build a home; doesn’t it make sense to protect it?

May Be Mandatory by Mortgage Lenders

While the police will not come to your door to demand proof of insurance, banks or mortgage lenders may request you to have home insurance before agreeing to lend you money. Their interest, after all, is to protect their investment. If the mortgagee is unable to make their payments, the banks or lenders need to use the house or condo as collateral in order to get their money back. Therefore, if a loss occurs such as a house fire, the lender will recoup their money.  Making home insurance mandatory in the mortgage agreement is their way of protecting their money.

May Be Mandatory by Landlords

If you are renting, your landlord might require you to have tenants insurance before signing a lease. Now, you might think this is unnecessary since they should have landlord insurance. But what if you caused damage to their property? You would be liable for the costs to fix the unit. If you had tenant’s insurance, the landlord’s insurance company would deal directly with your carrier. It makes the process a lot easier, instead of having to go after you personally.

Recommended by Insurance Brokers

Because home insurance is not required by law, many clients may think they can forego buying it altogether if they don’t have a mortgage. Or some clients may decide to get home insurance for the first year, just to satisfy the mortgage conditions. When insurance renewal time comes, they may be tempted to cancel in order to save on home insurance.

There are a few reasons why, as insurance brokers, we would advise our clients against doing this:

Home Insurance Protection

Sure, nothing bad really happens at home, right? It’s not like someone would drive their car into your home and cause an accident. So hypothetically, it might make sense to take that chance of going without home insurance.

But in reality, it only takes one cooking accident or one burst pipe to ruin your chances. And when that happens, having home insurance not only helps you replace and rebuild your home. If you had caused damage to a neighbouring property, home insurance would also cover your liability costs.

Get In Trouble with Your Lender

If your mortgage lender finds out you didn’t renew your home insurance, you might get in trouble with your agreement. They might decide to not continue your mortgage terms, or they won’t renew for the next period.

Tougher to Buy Home Insurance Again

If you have a record of not having home insurance and you need to buy it again for your mortgage renewal, you may have a harder time finding it at a reasonable price. Standard insurance carriers would question why you are suddenly looking to insure your home again, so you may have to go into a non-standard market in order to rebuild insurance history.

Home & Auto Insurance Discounts

If you are insuring your vehicle, bundling home insurance with the same carrier will net you discounts on your premiums. So you get additional home coverages, and you can save money on your car insurance. Sounds like a win-win.

You Should Buy Home Insurance

Home insurance isn’t mandatory by law, but it doesn’t mean you should overlook it. Even if there aren’t requirements by mortgage lenders or landlords, it’s a good idea to have it for peace of mind. For more information, read our other articles on Home Insurance Mistakes and What Is Renters’ Insurance so that you can make informed decisions.

When you’re ready, contact Begin Insurance on what home insurance coverages are right for you. Or get a free quote below.

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