What kind of insurance do I need?

Imagine this: You just bought your first condo. You've got an internet technician setting up your Wi-Fi, and your best friend is helping you set up a gallery wall of photos from your favourite memories. You soon get a phone call from your mom congratulating you on the new home, and she asks, "Have you got your insurance yet?" Cue the blank stare and awkward silence.

We get it, insurance coverage isn't the most exciting topic to talk about. But that doesn't mean it's not important. Whether you're buying your first car, first home, or starting a family, insurance coverage can help you protect what matters most. An insurance policy can give you peace of mind when life throws unexpected challenges your way.

In this guide, we're taking you through all there is to know about insurance, along with some of the most common ones you may want to think about as a Canadian. Stick around for more information.

Auto insurance policies in Canada

Car insurance is mandatory for all motorists in Canada. But, because insurance is regulated on a provincial level, the types of auto insurance you need and minimum amounts will vary based on where you live.

For example, third-party liability insurance is mandatory in all provinces, but drivers in British Columbia, Alberta, and Ontario are legally required to hold a minimum of $200,000 in coverage, while those in Quebec only require $50,000. In what follows, we examine the different kinds of car insurance:

Common types of car insurance

There are numerous types of auto insurance available, allowing you to customize your plan based on your individual insurance needs. However, some of the most common car insurance policies available include:

• Comprehensive insurance coverage (Optional): Comprehensive coverage provides financial protection if your vehicle is damaged as a result of theft, vandalism, fire, severe weather, falling objects, and water damage.

• Collision insurance (Optional): Collision coverage covers the cost of repairs and replacements of your vehicle if you cause an accident that damages your car.

• Accident forgiveness (Optional): Accident forgiveness is additional coverage that can be added to your car insurance policy as an endorsement, to protect your driving record and to help prevent your insurance premium from increasing if you have an at-fault accident claim.

• Third-Party liability coverage (Mandatory): Liability coverage provides financial assistance if you cause property damage or bodily injuries to other people when operating your motor vehicle.

• Accident benefits (Mandatory in Most Provinces): Pays for medical expenses that may arise if you are injured in a car accident.

• Uninsured motorist insurance (Mandatory in Most Provinces): Unisured motorist insurance covers repairs or reimburses you for a new car if you are hit by an underinsured, uninsured, or hit-and-run driver.

• Direct compensation - property damage (Mandatory in Some Provinces): If you get into an accident with an at-fault driver, DCPD this car insurance ensures you're swiftly compensated for your losses by your own insurance company.

Example of how mandatory and optional car insurance works

Let's say you're visiting friends in Alberta and rear-end someone during a snowstorm, damaging their car. Your mandatory coverage is meant to cover damages to their vehicle, so you don't have to pay high out-of-pocket costs. But, unless you add collision, which is optional coverage, you’ll be paying for your own repairs yourself.

How much does auto insurance cost?

Like we said, auto insurance is mandatory in Canada, so there's no way around it. Because insurance differs between provinces, insurance premiums can vary significantly based on where you live. Auto insurance premiums in Canada rose an average of 9.6% year-over-year in 2024, and this can be attributed to factors like inflation, increasing repairs, and more severe weather events causing damage.

Pro tip: When purchasing insurance for your vehicle, consider bundling your auto and home insurance with the same insurance company, along with other coverages, to save up to 20% on each policy to lower your overall car insurance premium!

Home insurance in Canada

Buying a home is a major milestone for most Canadians--a milestone that comes with risks. From burst pipes to slips and falls, having the right coverage for property can help protect your finances and interests. In 2024, insured weather-related losses in Canada hit a record-breaking $8.5 billion due to wildfires, hailstorms, and other severe weather events. With climate events becoming more rampant, having comprehensive homeowners insurance is more important than ever. The sections below describe covered and excluded items under this policy:

What homeowners' insurance covers

• Dwelling coverage: Covers the physical structure of your home if it’s damaged by things like fire, theft, vandalism, wind, hail, and more.

• Contents coverage: Replaces items inside your home if they're stolen or damaged by an insured peril.

• Liability protection: Covers legal and medical expenses if someone is injured on your property or if you accidentally damage someone else’s property.

• Additional living expenses (ALE): Pays for temporary accommodations, transportation, and other expenses if your home becomes unsafe to live in due to a covered loss.

What's not covered by homeowners insurance

The following is typically not included in standard home insurance policies. However, optional coverage is available should you require it:

• Overland flooding

• Identity theft

• Sewer backups

• Wear and tear or maintenance issues

Condo insurance

Condo insurance coverage is a bit different than standard home insurance. Essentially, your condo board typically has an insurance policy that covers the building’s structure and common areas like shared amenities, elevators, and hallways. The catch? You’re on the hook for your individual unit and what’s inside it. Keep reading to explore condo insurance coverage with illustrative examples:

What's included

Condo insurance includes the same types of insurance policies listed in standard home insurance: dwelling (to cover your physical unit), contents (for your personal belongings), liability insurance (for injuries and damaged property you cause, and additional living expenses (if you need to move out temporarily).

Example of when condo insurance kicks in

Let's say a burst pipe in your bathroom floods your condo and causes water damage to the unit directly below you. Because the water originated from your unit, you'd be on the hook for repair costs to your own condo and the one below. This is where liability insurance comes into play, to help you and your family pay for repair costs, up to your policy limits.

Tenant & renters insurance

In 2021, there were roughly 5.0 million households with renters in Canada, accounting for 33.1% of total households. If you rent an apartment, condo, or house, you may think that your landlord's insurance will protect you. It won't. That policy just covers the building itself, not your personal belongings or legal liabilities and that's why you need tenant insurance. Read on for details about renters insurance, including coverage and examples.

What Renters' insurance covers

Within a standard renters' insurance plan, you'll find the following types of insurance policies:

• Contents insurance: This insurance will cover the cost of repairing or replacing your items if they are damaged or stolen from your rental unit.

• Liability coverage: Protects you against liabilities that may arise if someone injures themselves at your rental property or if you cause property damage to someone else's property.

• Additional living expenses: Covers the cost of temporary accommodations, transportation, and meals if you are unable to live in your rental following a covered loss.

Example

If a kitchen fire starts in your rental and causes significant damage to your unit, your renters' policy will kick in to replace any damaged items, and ensure you have somewhere to stay during the time your rental home is being repaired, without having to pay out of pocket.

Ultimately, although it's not mandatory, tenant policies often cost less than $20/month to offer affordable peace of mind to renters across Canada.

Life insurance

If you're young and relatively healthy, life insurance may be the last thing on your mind. But, it’s one of the most important insurances you can buy for long-term financial protection for you and your family members.

57% of Canadian adults have life insurance. However, LIMRA states that 31% of Canadians say they don’t have enough coverage, representing over 8 million people at risk. Life insurance provides financial assistance to beneficiaries in the event you pass away. This money can be used to help cover funeral costs, pay off outstanding debts, or replace lost income. Below, we detail the types of life insurance and the situations they fit:

Types of life insurance

Health insurance can be divided into two categories:

• Term Life Insurance: Term life insurance offers protection for a certain number of years (10, 20, or 30) and can help prevent your family from experiencing financial burdens should you pass away.

• Permanent Life Insurance: This life insurance lasts a lifetime and grows in value over time. But it often comes with higher premiums.

Who needs life insurance?

The sections that follow address who needs life insurance:

1. Young People: Get life insurance early on to secure low-cost premiums.

2. Canadian families: Can replace spousal income, pay off mortgage debt, or fund your child’s future education.

3. Retirees: Can help with planning your estate and cover any final expenses you may have.

Other Types of insurance to consider

Beyond auto, home, and life insurance, there are several other types of insurance you may want to consider purchasing from your insurance company:

Travel insurance

Going on a trip? Travel insurance covers trip cancellations, lost baggage, medical emergencies, and more to ensure your next vacation is protected against unexpected occurrences.

Disability insurance

Disability insurance is a type of coverage often offered by many employers. However, there are options to purchase long-term disability insurance to top up employer coverage. This can help pay for a portion of your income and help ensure you have money to sustain your family.

Pet insurance

Vet bills are expensive. With pet insurance, a portion of your surgeries, medications, and chronic illness treatments for your furry friends are covered by your insurance company.

How to choose the right insurance for your insurance needs

Choosing the right insurance starts with understanding your daily lifestyle, potential risks, and financial situation. What you can do next:

Ask yourself

Helpful tips to keep in mind:

• What do I own? (car, home, valuables)

• What risks do I face? (driving daily, living in natural disaster zones, health issues)

• Who depends on me financially? (children, partner, pets)

• Can I afford to recover financial losses without insurance?

If you're still unsure what insurance you need, speaking with an insurance broker or insurance agent is recommended. They can help you narrow down coverage that will help bring you peace of mind and financial protection.

Speak with an insurance broker from BrokerLink today

Looking to buy insurance? BrokerLink is here to help! To speak with an experienced broker directly, don't hesitate to contact us over the phone or by email. You can also get a free, competitive insurance quote from several of Canada's top insurance companies from the comfort of your own home using our online quote tool!

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