What happens if you don't have home insurance in Canada?

What if your home was damaged by fire, flooding, or a break-in, and you had no way to recover the loss? That’s the reality for homeowners without insurance.

In Canada, home insurance is a contract that protects your home, personal property, and personal liability if someone gets hurt on your property. Home insurance covers various risks from unexpected events, such as fire, theft, vandalism, and certain types of water damage. It may even cover additional living expenses should you have to relocate temporarily while your home is being repaired.

Still, not everyone has coverage. A study by the Canadian Association of Financial Institutions in Insurance (CAFII) found that about 80% of Canadian homeowners are uninsured or underinsured. And when it comes to water damage, nearly one-third of Canadians mistakenly believe their standard policy already includes flood protection.

What are the financial risks of not having homeowners' insurance in Canada?

Skipping home insurance in Canada can leave you dangerously exposed to major financial losses, often far exceeding what you’d pay in yearly premiums. Without coverage, even a single unexpected event like a house fire or severe storm could result in costs that take years to recover from. What you risk financially without home insurance in Canada:

Extreme weather risks

According to Statistics Canada, from 1983 to 2008, catastrophic (CAT) insurance claims in Canada averaged $400 million annually. However, since 2009, they have continued to rise significantly, with insured losses reaching $3.1 billion in 2023 and nearly tripling that to $8.5 billion in 2024 due to weather-related losses, according to the Insurance Bureau of Canada. Alberta, Quebec, and Ontario saw the worst of the claims. With flood and storm events increasing in frequency and severity, so do the financial stakes of being uninsured.

Flooding risks

Flood coverage is often excluded from standard home insurance policies. Yet, according to the Canadian Climate Institute, more than 1.5 million homes in Canada are situated in high flood-risk zones, and around 80% of Canadian cities are built entirely or partially on floodplains.

Flooding is Canada’s costliest disaster. The Canadian Climate Institute also states that over the last decade, floods averaged $800 million in annual insured losses, and, for every dollar paid by insurance companies, households and taxpayers absorb two more in uninsured damage.

They even go further to add that with extreme rainfall and coastal flooding on the rise, the annual cost of flood damage to Canadian homes and buildings could increase three to five times by mid-century (exceeding $5.5 billion), and could climb as high as $13.6 billion by the end of the century.

If your home insurance policy doesn't include flood protection, you could be on the hook for paying out of pocket to repair or replace your home and belongings after the next major flood.

Liability risks

Most standard home insurance policies include liability coverage, which protects you if someone is accidentally injured on your property or if you unintentionally damage someone else’s property. In such cases, your insurance can help cover medical expenses and legal costs, up to your coverage limit, if the injured party decides to take legal action.

Without home insurance, however, you could be personally responsible for paying those medical bills and covering any legal fees out of pocket.

Other out-of-pocket damage risks

Beyond extreme weather and flooding, going without home insurance leaves you exposed to a wide range of other costly risks. Fires, for example, can destroy a home within minutes, forcing you to cover the full cost of rebuilding and replacing everything inside. Theft and vandalism can result in the loss of valuables and damage to your property, all without compensation.

Even smaller incidents, like burst pipes, can lead to thousands of dollars in repairs. In fact, according to Restoration Mate, a 24-hour emergency cleanup service in Toronto, most fire and water damage restoration projects cost over $5,000, and in severe cases, the cost can climb into the hundreds of thousands.

What about renters and condo owners without home insurance?

Home insurance isn’t just for homeowners. Renters and condo owners face serious risks without coverage, too. Risks faced by renters and condo owners who lack home insurance:

Renters/tenants

If you rent, your landlord’s insurance only covers the building structure. It does not cover your personal belongings or liability. That means if your laptop is stolen or if you knock over a candle and fire damages your furniture, you’re on the hook for those costs if you don't have tenant insurance. Likewise, if you accidentally cause damage to the unit or a neighbour’s, you could be liable for the repairs.

Condo owners

While the condo corporation insures common areas and the building’s structure, you’re responsible for your unit’s interior, your contents, and liability. Without personal condo insurance, damage from things like kitchen fires, leaks, or break-ins would also lead to out-of-pocket costs. Plus, if the condo board issues a special assessment to cover building repairs not insured under the master policy, you’d have no financial protection. Not sure if you’re covered? Contact a BrokerLink broker near you for a free consultation today.

Is home insurance mandatory anywhere in Canada?

No. Unlike car insurance, home insurance is not legally required by federal or provincial law in Canada. Still, many homeowners choose to invest in a homeowners insurance policy because it’s often the only protection against financial devastation after an unexpected disaster.

However, home insurance is often effectively mandatory if you have a mortgage loan. According to the Insurance Bureau of Canada, most mortgage lenders require their clients to have home insurance and won’t approve a loan without proof of coverage. Nevertheless, home insurance remains optional, but highly recommended, for mortgage-free homeowners in every province or territory.

How to protect yourself if you choose to opt out of home insurance coverage

While home insurance is highly recommended, some homeowners, especially those who are mortgage-free, may choose to go without it. If you’re considering this route, you'll still need to take some steps to protect yourself financially:

Build an emergency fund

Start by building a robust emergency fund that could realistically cover major events like fire or weather damage, theft, or liability claims. Experts often recommend having enough to rebuild your home and replace essential belongings, which can easily equal hundreds of thousands of dollars. Remember, without homeowners insurance, you’ll be responsible for all repair or replacement costs out of pocket.

Minimize potential risks

You may also want to consider installing preventive measures, such as:

• Smoke detectors

• Water leak sensors

• Security system

• Surge protectors

• Perimeter lighting to deter thieves or burglars

These can help reduce the risk of damage or theft and may also help lower insurance premiums if you decide to get coverage later.

Look into government assistance programs

Lastly, you can look into government assistance programs. Just don’t rely on them, as aid after natural disasters is not guaranteed and often limited. The Government of Canada provides links to provincial disaster assistance programs.

Get a free quote for home insurance from BrokerLink

Whether you own your home outright, have a mortgage on a house or condo, or rent, home insurance is one of the smartest ways to protect what matters most. It’s not just about covering the building; it’s about protecting your belongings, your savings, and your family’s well-being. With all the unexpected things that can happen, having home insurance gives you peace of mind and a safety net when you need it most.

Are you looking for affordable home insurance? Contact BrokerLink. We can help you explore your options, explain the differences between standard, broad, and comprehensive home insurance coverage, and find you a policy that is both affordable and tailored to your unique needs.

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