Toronto Home insurance

How Toronto home insurance works

Home insurance is not mandatory anywhere in Canada, but many lenders will only mortgage a home that’s insured. Coverage has many additional benefits, including protection for the home’s contents as well as liability protection if someone is injured while visiting the property – or, if the homeowner unintentionally causes damage to someone else’s property.

Those looking for home insurance quotes in Toronto should first consider what protection a policy offers. Regardless of policy type most cover the following:

• Contents: Protects the homeowner’s belongings if they’re damaged by a covered peril. Expensive items such as specialty sports equipment, jewelry, fine art or a wine collection may require additional protection in the form of a ‘rider’ that’s added to the policy.
• Property: Protects the home and surrounding buildings such as the garage if they’re damaged by a covered peril.
• Liability: Protects the homeowner if they’re sued by someone who is injured while visiting the home; also, protects the homeowner if they unintentionally damage someone else’s property.
• Additional living expenses: Provides coverage for expenses the homeowner assumes after being forced to leave the home due to a covered peril. For example, covers the cost of a hotel stay and food while away from the home.

Home insurance policy types

Next, we encourage Toronto homeowners to consider how providers structure insurance policies. There are generally three types of home insurance policies:

• Basic: Sometimes referred to as a ‘named perils’ policy because it offers protection against perils that are named in the policy. This is the most minimal coverage available.
• Broad: Also known as a ‘standard’ policy, insures the home against all risks and insures personal property against named perils.
• Comprehensive: Often called ‘all perils’ policy because it protects the home and its contents against all perils except any named as exclusions.

Additional coverage

Since no single policy provides coverage for every peril, many homeowners prefer to add coverage for more protection than policies provide out-of-the-box. These are considered optional coverage, ‘add ons’. They may also sometimes be called ‘endorsements.’ Some of the most popular include:

• Earthquake: Covers the home and its contents following damage from earth movement. An earthquake endorsement also provides protection against damage from landslide, snowslide and volcanic eruption - none of which are relevant to Toronto homeowners.
• Home-based business: Enhances the property limits and perils that are covered in a policy so that the homeowner with a home-based business can have adequate property and liability coverage. In instances where only a computer needs to be protected, a computer floater can be added to the policy.
• Identity theft: Covers the cost of replacing stolen personal documents such as a driver's licence and passport. May also cover wages lost while away from work to replace documents.
• Overland water: Covers the cost of damage from water that overflows from a nearby waterway such as a lake or river. Insurance providers distinguish different types of flooding – one of which is overland flood.
• Sewer back-up: Protects the home against damage from water that enters the home through an overflowing drain or toilet. Many Toronto homeowners may have experienced this type of flooding in 2013 and again in 2022. In the first instance, a powerful rainstorm caused about $1 billion million in insured damage in Toronto, according to the Insurance Bureau of Canada. More recently, in 2022, a thunderstorm produced 72 mm of rain over Toronto, with 51 mm falling in just one hour causing more than $875 million in insured damage. The storm system, which meteorologists refer to as a ‘derecho’, ranked as the sixth largest event in Canadian history for insured losses.