Buying a home is one of the most significant investments you will make in your lifetime. Purchasing home insurance is one of the best ways to protect that investment. Knowing when to purchase home insurance is just as important as understanding what it covers.
We reviewed the federal home insurance guide and the federal disaster-insurance guide, along with Insurance Bureau of Canada’s buying guide and coverage guide to research this topic.
When Is the Best Time to Buy Home Insurance in Canada?
Ideally, you should purchase your policy before closing on your new home. This timing allows you to provide proof of insurance to your lender during the closing process. This proof is very important, as without it, your mortgage may be delayed or denied entirely, jeopardizing your home buying process.
An Offer-to-Closing Insurance Timeline
| Stage | Insurance task | Why it matters |
|---|---|---|
| Before a firm offer | Check the electrical, plumbing, heating or roofing systems | A difficult-to-insure home may influence the offer, require certain conditions, and/or impact the budget for purchasing it. Insurance considerations can be an important factor from offer to close. |
| During conditions | Send all applicable inspection results, occupancy information and accurate property information. Get written agreement or requirements before closing. | You still have an opportunity to do any investigation you wish between offer and closing. You can still figure out repair costs. You can still tweak the deal. |
| After conditions | Choose policy. Verify policy limits/endorsements. Provide lender information. Set up payment/confirm proof of payment. | Just because you have an insurance quote does not necessarily mean coverage is bound. |
| Before the lender’s cutoff | Binder or certificate/confirmation of insurance is sent to the lawyer or lender as required | Insurance documents must match names, property address, effective date, and mortgagee clause. |
| Closing or possession | Make sure that it starts on the required date and time | Be sure to avoid a gap between the seller’s risk period and yours. |
| After issue | Carefully read all of your declarations and policy documents. Fix any errors immediately. | Keep in mind final issued terms can be different from initial quote/assumptions. |
Do You Need Home Insurance?
No single Canada-wide law generally requires home insurance. However, most mortgage lenders require you to insure your home. In addition, they’ll ask that their interest be named on the policy and require proof before advancing mortgage funds.
If you buy your home with cash and choose to go without home insurance, you’re responsible for any damage to your home. That means paying for repairs, replacing belongings, covering claims made against you, and paying relocation expenses if your home is damaged.
Home insurance is separate from mortgage default insurance, creditor life or disability insurance, title insurance and a new-home warranty. Ask which proof the lender requires, and don’t assume every lender uses the word binder the same way.
Properties That Need an Earlier Insurability Check
| Property fact | What the insurer may ask for |
|---|---|
| Older or partly updated wiring | Type of property; details on the electrical system; results of a home inspection; condition of necessary repairs; another insurer |
| Older plumbing, prior water loss or oil tank | Materials; age of property; previous losses; tank documentation; proof of repair |
| Old roof or active damage | Roof age, condition or material, including photos; repair timelines or settlement changes |
| Wood stove or other solid-fuel heat | This will depend on the insurer’s requirements regarding acceptable installation and inspection records for underwriting purposes |
| Rental, short-term rental or home business | Occupied/unoccupied; total number of units; high/low visitor traffic; special equipment on-site; permitting needed/obtained |
| Vacancy or major renovation | Project dates; project scope; contractor; site controls; alternative policy forms |
| Wildfire, flood, earthquake or remote fire response | For a subset of properties, it’s helpful to check address-specific insurance considerations, including availability, limits, deductibles, endorsements and binding restrictions |
If there are aspects of your property you’re unsure of, indicate that. Don’t make up information about your roof, electrical wiring or who lives in the house just to get a rate immediately. The quote may fall apart during underwriting, and it could cause issues down the road with your policy.
Read More: See When a Home Insurance Inspection May Be Required
Information to Gather Before You Request Quotes
Types of Home Insurance and What They Cover
| Policy level | Building | Contents |
|---|---|---|
| Comprehensive | Some policies provide a type of all-risk coverage: all risks except those excluded are covered | All risks except those excluded |
| Broad | Usually all risks except those excluded | Named perils listed in the policy. |
| Basic or named perils | Some home insurance policies cover only named perils. | Some cover only named perils. |
| No frills | Limited form is a form of home insurance for homes that do not qualify for other forms of coverage | Home insurance coverage is limited and policy-specific |
It is important to differentiate between coverage levels and additional coverage for certain perils or hazards.
Per federal guidance, fire, including wildfire, may be covered. Other perils, such as earthquakes, sewer backup and overland water, may be available as separate or optional coverage. Limits, deductibles and availability vary by insurer and location. To determine the coverage offered, check your home’s address.
Read More: Compare Broad and Comprehensive Home Insurance
Key Considerations Before Binding
If you’re not sure how to choose the right home insurance policy for your needs, then consider the following factors before making a decision:
Coverage Limits:
Ensure that your policy provides sufficient coverage for both your dwelling and personal belongings. Consider factors like local rebuilding costs and the value of your possessions.
Deductibles:
Understand how much you will need to pay out-of-pocket before your insurance kicks in after a claim. A higher home insurance deductible generally results in lower premiums but may lead to higher costs if you need to file a claim.
Exclusions:
Familiarize yourself with what is not covered under your policy. Common exclusions include flood damage and earthquake damage. These risks may require you to purchase additional coverage.