Average home insurance cost

12 minute read Published on Jun 20, 2023 by BrokerLink Communications

Calculator with wooden house and coins stack and pen on wood table.

Wondering how much home insurance costs in Canada? BrokerLink is here to explain how home insurance costs are calculated and give you tips on how you can keep home insurance costs down.

How much does home insurance cost?

The average cost of home insurance in Canada is roughly $1,000 per year. That said, the cost of home insurance can vary significantly between policyholders because rates are dependent on so many factors. For example, where you live is a major factor, with some provinces reporting higher average home insurance rates than others. Ontario and British Columbia tend to have far higher rates than the Maritime provinces. Home insurance rates also depend on the specific policy and coverages you choose. The cost of high value home insurance will not be the same as vacant home insurance.

Generally speaking, home insurance premiums are based on the likelihood that your home will suffer a loss and how major that loss will be. To calculate your premium, an insurance company will assess the risk level of you and your home.

How home insurance premiums are calculated

To understand how much home insurance costs in Canada, you must have an idea of how home insurance premiums are calculated. As mentioned, the cost of home insurance ultimately comes down to all kinds of factors. Such factors relate to the specific features of your home, as well as its location, which insurance company you choose, and the amount of coverage you select for your policy:

Value of the home

Generally speaking, the larger and more valuable your home, the more expensive your home insurance premium is likely to be. This is because if something happens and your home is damaged, it will cost the insurance company more to repair or replace it. For example, if your home was completely destroyed in a house fire, and it has six bedrooms, a swimming pool, and a wood fireplace, rebuilding costs would be much higher than if a small, two-bedroom home was destroyed and needed to be rebuilt.

Location of your home

Further, your geographical location will also impact your home insurance rates. Why? Certain areas are more susceptible to risk. For example, if you live near a major body of water, then your home may be at greater risk of flood damage. Conversely, if you live in an area prone to natural disasters, like earthquakes or tornadoes, your premium could be affected as well. An insurance company will also ask for your specific address to look into crime rates in your neighbourhood, which can help them assess the likelihood of a theft or vandalism-related incident occurring.

The features of your home

Key features of your home can also come into play. An insurance company will assess the age and condition of your home and its most prominent features, like the roof, plumbing, electrical, and HVAC systems. If any of these systems are found to be outdated or in poor condition, your home insurance rates may go up.

The amount of coverage

Next is the issue of coverage. The types of coverage you wish to include with your home insurance plan, along with the coverage limits and deductibles you select, will all play a major role in your final premium. For example, if your home contains many high-value items, like jewellery, vintage wine, or artwork, you will likely need to purchase a larger amount of contents coverage, which can drive up your home insurance rates. Similarly, if you want the peace of mind of adding extra coverage like home-based business insurance, equipment breakdown insurance, or overland water insurance, your premium will also be higher. Beyond the coverages and limits you choose, your deductible matters too. With almost any type of insurance policy, the higher the deductible you choose, the less your policy will cost. Conversely, the lower your deductible, the higher your premium will be.

To learn more about how home insurance premiums are calculated in Canada, contact BrokerLink.


Factors affecting home insurance rates in Canada

For a quick rundown of the main factors impacting home insurance rates in Canada, keep reading:

Replacement cost or value of your property

An insurer will want to know the estimated value of your property as this will give them an idea of how much they would have to pay in the event that your home was damaged or destroyed.

Your home address

Your home address comes into play as it helps an insurer assess the odds of a weather-related incident or a crime, such as theft happening.

Proximity to a fire hydrant, fire station, or emergency services

Insurance companies will determine how close your home is located to emergency services or water sources, like fire stations or fire hydrants. If yours is located close to one, you could qualify for lower rates.

The age and condition of your home’s roof

Roofs cost a lot of money to repair, which is why an insurance company will ask for details on the age and condition of your roof before calculating your premium. Properties with roofs that are 20 years old or younger might enjoy lower rates.

The age, condition, and type of heating system used in your home

The age and condition of the heating system in your home, as well as the type of heater your home has, can all impact premiums. Old heating systems in poor condition or those that are generally more risk-prone like oil tanks, may result in higher premiums.

The age, condition, and type of the electrical system in your home

Many details about your home’s electrical systems, such as its age, whether it uses breakers or fuses, and the type of wiring it has can all impact home insurance costs. Note that knob and tube wiring often leads to higher insurance premiums, so you may want to consider replacing them if your home has them.

The age, condition, and type of the plumbing system in your home

To further assess risk, an insurance company will want to know about your home’s plumbing system. For example, if it is old or contains lead or galvanized pipes that are more susceptible to cracks and leaks, you could see higher home insurance rates.

Home security system

An insurance provider may ask if there is a home security system installed on your property. If there is, you could qualify for a home alarm system discount on home insurance.

Details of any detached structures on the property

If your home contains detached structures, which could include a shed, swimming pool, gazebo, detached garage, etc., you must inform your insurer. The more structures on your property, the more your coverage is likely to cost. You can learn more about the structures covered by home insurance by contacting BrokerLink.


Home insurance coverage options

When purchasing home insurance, you will need to decide which types of coverage to include with your policy. The coverages you choose, and the amounts you choose for each, play a huge role in the cost of your policy. A few of the most common types of home insurance coverage in Canada are listed below:

Dwelling coverage

Dwelling coverage is typically included in most home insurance policies as it protects against the most common risk: property damage. Specifically, dwelling coverage will protect your physical home and any attached structures from property damage caused by insured perils. Insured perils vary but may include those listed below. Note that if you want to be protected against the widest range of risks, purchasing all perils insurance is generally recommended:

  • Fire
  • Lightning
  • Smoke
  • Theft
  • Wind
  • Car / aircraft impact
  • Explosion
  • Falling objects

Content(s) coverage

Contents coverage is another type of coverage commonly seen in home insurance policies. Contents coverage picks up where dwelling coverage leaves off in that it safeguards the items inside your home, rather than the home itself. In other words, by adding content coverage to your home insurance policy, you are protecting your personal belongings from damage or theft. If any items are lost or damaged due to a name peril, your insurer would step in and help cover the cost of replacing or repairing them. All kinds of items can be covered under this portion of coverage, from jewellery and clothing to electronics, furniture, decor, artwork, sports equipment, and more. When selecting your contents coverage limit, make sure you choose one that reflects the value of the items in your home. If you have high-value items, like vintage wine or musical instruments, speak with an insurance broker about additional coverage requirements.

Personal liability coverage

Personal liability coverage is another staple of home insurance policies in Canada. It is designed to protect homeowners against liability claims that may be brought against them by third parties, such as guests or visitors to your home. For example, if a guest was walking up to your front door and tripped and fell on an icy walkway, they could sue you. As the owner of the home, you could be held liable, which means you would be on the hook for legal defence fees, the claimant’s medical expenses, and more. However, if your house insurance plan includes personal liability coverage, your insurer would step in to help cover these costs.

Business coverage

Business coverage is a common home insurance add-on in Canada. It is important for both home-based businesses, as well as employees who work out of their homes. It may not be necessary in all work from home situations. However, if you store expensive inventory or business-related contents at your home or have clients visiting your home, adding business insurance coverage to your house insurance plan is a must. Otherwise, you will not be covered if an incident related to your business occurs in your home.

Sewer backup coverage

Sewer backup coverage is a type of flood insurance coverage that is worthwhile for many policyholders. With this type of insurance, your insurer will help cover the costs of repairing water damage that occurs due to a sewer backup in your home. Please note that installing a sewer backup detection device in your home can help mitigate the increased insurance premium that comes from adding this type of extra coverage to your policy.

Overland water coverage

Overland water coverage is another popular type of flood insurance. This type protects against water damage to your home that occurs due to a nearby lake/river, overflow, heavy rain, or rapid snow melt. Thus, if you live in a valley or near a major body of water that might make your home more flood-prone, overland water coverage is a wise choice.

Equipment breakdown coverage

Equipment breakdown coverage is one final type of home insurance coverage that you may wish to add to your policy. It protects you in the event that a piece of household equipment breaks down following a mechanical or electrical failure. Under this portion of your policy, your insurer may reimburse you for the cost of repairing or replacing a piece of broken equipment, such as a dishwasher, refrigerator, oven, washing machine, furnace, air conditioner, etc.

How to keep home insurance costs low

Owning a home is expensive enough, which means chances are, you want to keep home insurance costs as low as possible. We get it, which is why the BrokerLink team is always happy to share their expertise and advice on ways that you can save money on home insurance. Below is a list of cost-saving tips to ensure you never overpay for home insurance again:

Be smart about insurance claims

Most policyholders understand that the more insurance claims they make, the more their premium is likely to go up. Therefore, if you want to keep home insurance costs low, experts recommend being wise about filing claims. Of course, you should always file a claim when needed. However, for extremely minor claims that are unlikely to result in a payout much bigger than your deductible, not filing a claim might be the smarter decision. Please note that if you make too many insurance claims on your home insurance policy, your insurance company may refuse to renew your policy and other companies could refuse to insure you down the road.

Inform your insurance company of any upgrades

Any updates or upgrades you make to your home can impact your home insurance rates. Therefore, we recommend being as proactive as possible. If you are finally taking the time to update an old roof, replace an out-of-date HVAC unit, or install a protective feature like a sump pump or sewer backup detection device, make sure to inform your insurance provider as soon as possible. The newer, more efficient, and better-maintained your home is, the more likely that your premiums will be lower. However, if your insurance provider has no idea that you’ve made these updates, they can’t reduce your premium.

Review your home insurance policy before renewing

If your home insurance policy is up for renewal, take the time to review it before renewing. This is a great way to determine if your current coverage is still working for you. If it isn’t, you will still have time to update it before your policy expires. You might even have time to shop around for other policies if you aren’t happy with your new rate. If you need help reviewing your policy, contact a BrokerLink insurance advisor who can give you their professional opinion on whether to stick with your current plan or find a new one.

Install a security system in your home

Make your home safer, reduce the odds of a break-in, and qualify for a home insurance discount by installing a security system in your home. Be sure to read the terms and conditions that must be met to qualify for such a discount in advance of purchasing one, as only certain systems may be eligible.

Bundle and save

Another tip to save money on home insurance is to bundle multiple policies. Many insurance companies offer savings to customers who purchase more than one insurance product from them, whether they purchase two home insurance plans or one home insurance plan and one car insurance plan, etc.

Raise your home insurance policy deductible

Did you know that premiums and deductibles go hand in hand? It’s true. The home insurance deductibles you choose are one of the biggest factors in determining the cost of your policy. Higher deductibles usually come with lower premiums and vice versa, so if you want to cut home insurance costs, consider selecting a higher deductible.

Pay for your home insurance plan annually instead of monthly

If you want to avoid increasing the cost of your policy due to hidden transaction or administrative fees, opt for a yearly payment plan instead of a monthly one. While this isn’t the case with all providers, some charge extra for the convenience of a monthly payment plan.

Choose your next home wisely

There are all kinds of house-specific factors that influence insurance rates. Whether your home has a pool, the number of detached structures on the property, the age and condition of the roof, plumbing, electric, and heating systems, and how close it is to emergency services can all impact rates. Understanding which factors matter when it comes to home insurance can help you pick a new home.

Install a sump pump or sewer backup prevention device on your property

Installing a protection feature, such as a sump pump or sewer backup protection device, on your property can mitigate the chances of a flood. In turn, your insurance provider is likely to reward you with a cheaper rate. Often the savings outweigh the price of purchasing one of these items.

Reach out to an insurance broker for more money-saving tips

One final way to ensure you get the best deal on your home insurance plan is to contact a licenced insurance broker near you. All BrokerLink insurance brokers are fully licenced and know the ins and outs of home insurance. They will make sure that you do not overpay for home insurance, and instead, that you actually save money on your policy. Ask a broker about various home insurance discounts you may be eligible for, as well as how you can save money through home insurance tax deductible.

Contact BrokerLink to discover more about the average cost of home insurance in Canada

Still have questions about home insurance costs in Canada? Don’t hesitate to reach out to us. BrokerLink is one of the leading insurance brokers in the country. We are home insurance experts and know all about how property insurance costs are calculated. We can provide you with expert tips on how to save money on your next property insurance policy, as well as a free home insurance quote. We can also explain the differences between market value vs replacement cost and home insurance vs homeowners insurance. What are you waiting for? Contact BrokerLink today to find out more about how home insurance works and how much it will cost you.

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Average home insurance cost FAQs

Are home insurance quotes free?

Yes, many insurance companies and brokerages offer complimentary property insurance quotes to customers. To obtain one, all you have to do is contact a local insurance company or broker near you. Nowadays, many insurance professionals offer free quotes online, over the phone, or in person, and obtaining one can take as little as five minutes.

Is it illegal to not have home insurance in Ontario?

No, it is not illegal. Home insurance is not government mandated in Ontario the way that car insurance is. That said, you may be legally obligated to purchase home insurance if you sign a contract, such as a lease agreement or mortgage loan agreement, that stipulates you must purchase such coverage.

If you have any questions, contact one of our local branches.