Whether you’re a first-time homeowner or you’ve owned your home in Toronto for years, it can be challenging to understand the ins and outs of home insurance. With so many coverage options, risk factors affecting premiums, and different insurance providers, you may feel too overwhelmed to decide what’s right for you.
Here, learn all about the basics of getting home insurance in Toronto, why you need it, and the different types of coverage available. Discover factors that can impact your home insurance premiums and how to save money on your policy.
Why Do I Need Home Insurance in Toronto?
Home insurance isn’t mandatory in Toronto. However, it’s strongly encouraged that you get a policy because of these reasons:
If someone accidentally gets hurt on your property, liability coverage can help you pay for legal expenses or settlement costs.
Coverage for loss or damage
Your home is at risk of suffering expensive damage or loss due to natural disasters or other perils like theft and vandalism. A home insurance policy can keep you from becoming house-poor if you need to rebuild your home or find a new one. It can even cover the cost of temporary housing as your home is repaired.
Lenders and financial institutions like banks may require you to get a home insurance policy as a condition for getting a mortgage loan.
How Does Home Insurance in Toronto Work?
As with other insurance products like tenant insurance or condo insurance, Toronto home insurance gives you financial coverage for your home in the event of certain unforeseen events. By purchasing a home insurance policy, you can file a claim that allows you to handle the cost of damage or losses covered under your policy terms.
There are three types of home insurance policies that you can buy in Toronto. Here’s a basic overview of each type:
This is usually the most affordable type of home insurance, where you can choose coverage only against specific perils. If it’s not listed in your basic policy, your insurer won’t give you coverage for that risk.
This is typically the most expensive option but also the one that offers the most protection for your home and belongings in it. Under comprehensive home insurance, you’ll have protection against all risks that aren’t explicitly excluded, as well as risks that don’t require optional add-ons.
This mid-price option offers comprehensive coverage for your home but basic coverage for your personal belongings. This means your home will be protected from all risks except those that need add-ons or are specifically excluded, while your possessions are only protected against risks listed in your policy.
The typical Toronto home insurance policy may come with these types of home insurance coverage and liability coverage. Here’s a quick description of each standard coverage inclusion:
- Dwelling: This covers damages to your home (a.k.a. your dwelling) and its attached structures, like a garage. Coverage is typically for damages caused by risks such as lightning or fire, depending on the terms of your policy.
- Detached private structure: This covers damages to private, detached structures on your property, such as a detached garage or tool shed.
- Personal property: Home insurance policies also cover your personal property, such as furniture and appliances. Note that some special or high-value items like artwork may need additional coverage.
- Additional living expenses: If you’re suddenly displaced from your home because of an insured risk, your policy will also cover the cost of temporary housing.
- Personal liability coverage: This covers settlements and legal expenses in case someone is accidentally injured on your property.
- Voluntary property damage: This covers direct damage or loss that you’ve unintentionally caused to someone else’s property. This also applies to unintentional loss or damage caused by a minor who is 12 years old or younger in your care.
- Voluntary medical expenses: This coverage helps you pay for the medical expenses of a person you’ve unintentionally injured on your property or someone who accidentally hurts themselves on your property. This usually covers up to one year of expenses up to one year from the time of injury, with certain cost caps.
Apart from the standard coverage offered by Ontario home insurance policies, there are other types of coverage you can purchase for extra protection for your property. These are some of the most common coverage add-ons:
- Credit and debit card forgery: This additional coverage will offset any financial losses or other damage you suffer because of credit or debit card forgery.
- Earthquakes: This add-on covers damage or losses due to earthquakes.
- Flooding: Protection from flooding typically includes both overland water and sewer back-up coverage. While you may opt to purchase these water-related add-ons separately, you may want to combine them into a flooding protection package because of severe weather and other regional risks.
- Freezer food: This protects food in your property’s freezers if your freezer malfunctions or there’s a power outage.
- Home sharing: Standard policies don’t cover loss or damage caused when you rent out your home. This add-on covers your property if you plan to use it for short-term rentals on sites like Airbnb.
- Identity theft: This covers the cost of replacing crucial documents for identification, such as your birth certificate and driver’s licence.
- Lock replacement: Some insurers offer to cover the cost of replacing your home’s locks.
- Mass evacuation: If the government issues an evacuation order due to an incident like a flood, this add-on covers some expenses incurred during your absence from your home.
- Overland water: Rainfall or thawing snow can cause nearby freshwater and wastewater sources to overflow beyond their typical levels. This add-on covers damage caused by this excess water when it seeps into your property.
- Personal valuables: Standard plans offer limited coverage known as riders for items like jewelry and artwork. This add-on increases the limits for these items in the event of loss or damage.
- Sewer backup coverage: If sewage or wastewater comes up from a main sewer, this add-on will cover the damage and losses caused.
What Is Not Included in a Typical Home Insurance Policy?
Even if you’ve opted for a highly comprehensive home insurance policy, there are some risks that insurers explicitly don’t include as a covered peril. These are called “exclusions” by home insurers.
Here are the most common home insurance exclusions:
If your home was damaged due to criminal activity, it won’t be covered by your insurance policy.
Damage from tenants
Generally, home insurance companies require specific coverage for homeowners/landlords who plan to rent out their properties. A standard home insurance policy won’t include coverage if you rent your home out and the tenant causes damage.
Most policies exclude this risk, but you can cover earthquake losses and damage as an add-on to a standard policy.
Failure to maintain your home
Damage or losses caused by poor home upkeep (e.g., clogged storm drains, broken bannisters) won’t be covered, as your insurer deems it your responsibility to manage wear and tear.
Flooding is typically not covered by a standard policy, but it may be included as an add-on.
Home business activities
Home businesses will need separate home-based business insurance to cover home or equipment damage.
Because this is considered a preventable risk, most insurers don’t cover insect damage.
Mortgage or property taxes
These are separate expenses handled by policy owners as they’re unrelated to your home insurance policy.
Mould caused by poor home maintenance is typically excluded by home insurance policies. Note that this is separate from mould caused by an insured peril, which will be covered by your policy.
Vacant dwelling risks
Many insurers may void your insurance if you leave your home vacant for a prolonged period.
This is by no means an exclusive list of risks typically excluded from a home insurance policy in Toronto. Talk to your home insurance provider to see what’s covered by your policy in case of loss or damage.
How Much Does Home Insurance in Toronto Usually Cost?
It’s hard to give a definitive answer to the typical cost of home insurance in Toronto, as your quotes are affected by factors like your home’s age and value, your policy type, and your location. The cost also differs between home insurance companies as each one has different methods for assessing risks and costs of coverage. This is why premiums differ between providers.
Expect to pay a premium within a range of $700 to $2,000 annually for Toronto home insurance. On average, Toronto home insurance costs $1,250 annually, which is lower than the average Ontario home insurance rate.
Why Are Toronto Home Insurance Rates so Expensive?
There are three factors that may be driving up Toronto home insurance rates. Here’s a quick explanation of why these things make premiums higher in Toronto:
- Greater number of older properties: Most homes in Toronto are quite old, so it’s more likely that they have older systems for heating, plumbing, and electricity. This increases your likelihood of filing a claim for a fire or flood.
- Higher real estate values: Real estate prices indirectly affect home insurance premiums. As home values go up, so do the cost of rebuilding and the amount of coverage you’ll need from a policy.
- Housing density: Toronto is densely populated, and most of its homes are connected houses or apartments with very little space between units. This increases the risk of spreading fires between homes.
What Determines the Cost of Home Insurance in Toronto?
The cost of home insurance in Toronto varies depending on several considerations, such as your postal code, your property type, and even your credit score. Here are some of the different cost factors for home insurance in Toronto:
Detached private structures like tool sheds, pool houses, and gazebos may increase your home insurance premiums. Further, a pool typically increases your premiums because of the increased risk of drowning, as well as the extra cost of maintaining a surrounding fence and lock. Make sure your home insurance covers all of your detached structures.
The majority of Canadian provinces use your credit score to determine your home insurance premium. This is because it’s often perceived that a bad credit score increases the risk of providing home insurance, as it increases the odds of late or non-payment of premiums.
If your home is older, in poor condition, or needs to update systems like heating and plumbing, it may be pricier to insure. This is because older electrical, heating, and plumbing systems increase the risk of certain accidents like fires and water damage from leaks.
If you live in an area prone to natural disasters like earthquakes or flooding, your premiums may be higher. Insurers also tend to charge higher premiums in areas where more homeowners have filed claims over recent years.
Replacement cost is based on how much it would cost to rebuild your home at its present condition and value. The higher your home’s present value, the more expensive it is to insure. Note that when factoring in replacement cost, you’ll need to inform your home insurer of any expensive items or upgrades like jewellery or artwork which will need extra coverage.
Past Claims History
Simply put, the more claims you have in a 10-year period, the higher your monthly premiums will be. As a general rule, make sure that the cost of your potential claim is higher than your policy deductible, which is the amount you have to pay before your insurer covers the rest.
Some insurance providers will ask you to disclose the number, type, and breed of any pets you may have, as some pets are considered an additional liability risk.
Whether you live in a condo unit or a single-detached home, different types of dwellings will be evaluated differently by an Toronto insurer as each comes with different risks.
Renovations And Improvements
Some improvements can lower or increase your home insurance premiums. For example, converting a room into a home theatre may increase your home’s present value, so your premiums may go up. On the other hand, improvements that increase home safety like an alarm system may lower your premiums. Note that you should tell your home insurer both before and after you renovate your Toronto home.
The average asphalt shingle roof will begin to wear down after approximately 10 to 15 years. Unless it’s properly maintained and repaired, your roof may increase the risk of letting water leak in and damage your house. Toronto home insurers may lower your quotes if they see that your home’s roof is made with high-quality, durable materials.
Smoking Or Non-Smoking Policyholders
If you’re a non-smoker, an insurer may offer lower premiums as they consider it less likely that a cigarette or other smoking device will start a fire in your home.
While conducting business in your home won’t always increase your home insurance premiums, this depends greatly on the kind of business you’re running. For example, you can expect to pay more if you’re listing your home for short-term rentals or running a home-based catering company because there is more risk of liabilities or accidents.
Type Of Coverage You Choose
If you get a policy with a higher deductible, this will result in a lower premium. Additionally, the higher the coverage and the more risks you are protected against, the higher your premiums will be.
Your Chosen Insurer
Different insurers may offer varying quotes even for the same type of policy. Coverage costs vary between companies, so it’s important to shop around to find the best deal.
What Risks Affect Homeowners in Toronto?
Many homeowners in Canada are affected by similar risks. However, there are some specific risks which Toronto homeowners should keep an eye on, and these are:
With 3,001 residential break-ins reported to the Toronto Police in 2022, break-ins are a serious risk in Toronto that can result in property damage and theft.
Because of thawing snow in the spring and the city’s low elevation, Toronto experiences flash floods. This can cause serious water damage to your home, especially if you have a home with a basement.
Toronto temperatures have been known to drop as low as -30°C, so Toronto homeowners need to be vigilant against freezing or burst water pipes in the winter.
Toronto’s high home and population density mean fires can spread swiftly between homes.
Does Where You Live in Toronto Affect Your Home Insurance?
Yes, where you live in Toronto affects your home insurance. Certain areas pose higher risks for different perils and natural disasters, leading to increased chances of filing claims. As a result, different areas may have varying home insurance quotes for homes of similar size, value, and condition.
For example, Toronto’s Danforth-Greektown area is known as one of the city’s safer and more family-friendly neighbourhoods, so a home insurer may consider it less likely that you’ll file a claim. On the other hand, living in bustling Moss Park near the Downtown Core may get you higher quotes because of its historically high property crime rates. Living in densely populated neighbourhoods like Queens Quay and King West may raise concerns for your insurer about the risk of spreading fires in clustered homes.
Compare quotes using MyChoice to see how much home insurance costs in your Toronto neighbourhood. This will help you find the most competitive quotes for your area so you can find the best deal no matter where you live.
Census Data: Housing Data in Toronto
Curious about the average Toronto home’s age, condition, and type? Here’s a simple overview of Toronto housing based on the 2021 Census of Population:
Type of Occupied Dwelling
Nearly half (46.7%) of Toronto’s occupied dwellings are apartments in a building that has five or more storeys. Single-detached houses trail at a distant second, comprising 23.3% of all occupied Toronto dwellings.
Owner vs Renter Stats/Condo vs Non-Condo Owners
There’s a near-even split between homeowners and renters in Toronto. 51.9% of Toronto homes are owned, with 48.1% rented. 30.4% of owned homes are part of a condominium development in Toronto, while 69.6% are not.
Private Dwellings by Period of Construction: New or Older Homes?
Most of Toronto’s private dwellings are older buildings, with 29.3% of homes constructed in or before 1960 and 28.8% of homes constructed between 1961 to 1980. Only 7.3% of Toronto homes were built from 2016 to May 2021.
Major Repairs or Just Maintenance Needed?
Most Toronto homes need only regular maintenance and minor repairs (93.6%). Only 6.4% of Toronto’s private dwellings need major repairs.
How You Can Get Cheap Home Insurance in Toronto
If you’re trying to save money on your preferred home insurance coverage, here are some important steps to take:
Comparison shopping between different providers will help you find the best rate for your desired policy type. Use an insurance aggregator like MyChoice to get and examine immediate quotes from various Toronto home insurers.
Increase your deductible
You can ask your insurer if you can increase your deductible, a.k.a. the amount you pay before your insurer pays out the claim. Increasing this reduces the risk for your insurer that you’ll submit a claim, so they may offer to lower your premiums.
Bundle with auto insurance
Some companies offer bundled home and auto insurance at a good discount for both policies.
Renovate old home systems like wiring and plumbing
Renovating to remove known risks like faulty wiring and old plumbing may help reduce your premiums.
While hefty annual premium payments may be daunting, some insurance providers give you a discount in exchange as it reduces their administrative costs.
Install monitored alarms
The safer you make your home against thieves, the higher the chances that you’ll go claim-free. This may convince your home insurer to offer lower premiums. Install monitored home security systems to deter break-ins and get immediate notifications of disturbances.
Who Provides Home Insurance Quotes in Toronto?
There are different ways that you can get a home insurance quote in Toronto. Here are the four providers that you can use or contact for home insurance rates:
Insurance brokers can represent you as a buyer and get quotes from multiple insurance companies, as well as advice on choosing a policy.
A direct writer is an insurance company that doesn’t have independent agents offering their quotes and policies. Typically, direct writers offer their products through their official websites and/or their call centres.
Insurance agents are independent professionals who can provide quotes and policy information from the companies they work with.
Insurance aggregators are online platforms like MyChoice that allow you to compare rates and coverage options from multiple providers. Because these allow you to input your information and receive quotes from multiple providers in one place, this can save you time and effort.
FAQs About Home Insurance in Toronto
Is home insurance in Toronto mandatory?
No, home insurance in Toronto is not mandatory. However, you should still consider getting home insurance to cover your house and belongings. A home insurance policy can give you the funds you need to repair or rebuild your home after an insured event causes loss or damage.
What is not covered by a typical Toronto home insurance plan?
The following are typically not covered by a Toronto home insurance plan:
Flooding: Flooding is a separate add-on.
Earthquakes: This risk is typically not covered, but you may opt to get an earthquake risk add-on.
Wear and tear: Damage or destruction caused by improper home maintenance won’t be covered.
Tenant damage: You’ll need separate coverage if you plan to use your home for short-term rentals.
Insect damage: Most insurers consider this a preventable risk and won’t cover it.
Mortgage or property taxes: These expenses are excluded as they’re unrelated to your policy.
Vacant dwelling: Leaving your home vacant for an extended period may void your policy.
Mould: Only mould caused by an insured peril will be covered by your policy.
Criminal activities: Home insurance doesn’t cover damage due to criminal activity conducted in your home, such as fraud.
Home business activities: Home businesses need to get separate home-based business insurance.
Can you cancel home insurance in Toronto?
Yes, you can cancel home insurance in Toronto. Note that cancelling your home insurance before its expiry may cause you to incur penalties and cancellation charges. That said, switching to a more affordable home insurer can offset the costs of cancelling your old policy.
Check your policy’s terms and conditions first to find out how to cancel your policy and what financial consequences to expect. Most home insurance companies will need a written notice of cancellation either physically mailed or emailed to them to formally start the step.
What factors aren’t used to calculate Toronto home insurance rates?
These are some of the factors that companies typically won’t use to calculate Toronto home insurance rates:
Occupation (unless you regularly work from home, as some insurers may increase your quotes)
Some factors you may never even have considered can impact your rates, such as your marital status and credit score. Talk to your insurance company to find out more about what can increase or decrease your insurance quotes.
How do Toronto home insurance claims work?
Here’s how Toronto home insurance claims generally work, step by step:
1. Report the damage or loss: Inform your insurer about the loss or damage to file your claims. Include all relevant evidence, such as detailed descriptions of the event, photographs, and videos.
2. Evaluation: An adjuster from your home insurer will schedule a visit to assess the extent and value of the damage or destruction.
3. Approval or denial: After evaluating your documents and inspecting the damage, your insurer will either approve or deny your claim. If approved, they will offer a settlement amount.
4. Claim resolution: You can accept your settlement or negotiate with your insurer. In some instances, you may also file a dispute with the Financial Services Regulatory Authority of Ontario (FSRA).
Do Toronto real estate prices affect the cost of home insurance?
Yes, Toronto real estate prices affect the cost of home insurance. While real estate prices aren’t used as a factor for calculating your home insurance premiums, they may indirectly affect the cost of coverage because they affect the cost of rebuilding or repairing a home that’s been damaged or destroyed.
Because higher real estate prices make the cost of rebuilding higher, this affects the amount of coverage you’ll need in a home insurance policy. Consequently, higher real estate prices tend to increase home insurance costs.
Do I need home insurance in Toronto for Airbnb?
Yes, you need home insurance in Toronto if you plan to use your house for short-term rentals on Airbnb. Getting home insurance isn’t mandatory and Airbnb offers very limited host protection insurance.
For peace of mind, getting home insurance for short-term rentals can protect your home. Notify your insurer if you plan to use your home as an Airbnb to see how much additional protection will cost. Renting your home out without informing them may void your policy.
Are Toronto home insurance fees tax-deductible?
Generally, Toronto home insurance fees aren’t deductible for personal residences. However, there are some instances where your home insurance fees may be tax-deductible, such as if your home is a rental property or used for business purposes. Consult a tax professional to see if you’re eligible for any deductions connected to your Toronto home insurance fees.