Can I have two home insurance policies?

One of the milestones most Canadians work toward is owning a home. To protect this investment, home insurance coverage, also known as homeowners insurance, safeguards the physical structure of your house under building insurance, your personal belongings under contents insurance, additional living expenses, and liability coverage against personal liabilities that may arise.

Although home insurance isn't legally mandatory for Canadians, if you don't own your property outright, having coverage may be a condition of your mortgage contract. With home insurance premiums increasing on average by 7.66% year-over-year in 2024, Canadians are now more than ever reevaluating their insurance needs to protect their homes and finances should disaster strike.

Some homeowners may wonder whether having two insurance policies offers additional protection. Maybe you inherited a vacation home, have a rental property, or are having doubts about your existing home insurance policy. This raises the question of whether having two home insurance policies is possible or legal in the first place.

At BrokerLink, our goal is to help you protect your most valuable investment. Stick around as we explore the legalities of having more than one property insurance, why you may or may not consider doing so, the potential risks, and smart alternatives below.

Can you legally have two home insurance coverages?

In Canada, it's not illegal to have two insurance policies for your home. That said, having two policies is uncommon and can raise red flags with your insurance company. Why? It comes down to compensation.

For example, let's say you were to file an insurance claim for damages with your insurance company. Once approved, your insurance provider will compensate you for your losses. If you were to have a second home insurance policy with a different insurer, you could technically be compensated twice.

This is where you can run into trouble. The insurance industry operates on the principle of disclosure and indemnity, meaning you're required to be 100% truthful with your insurer at all times. Therefore, having duplicate insurance policies violates this principle, which can be considered fraud.

Most basic house insurance contracts have restrictions that prohibit duplicate coverage. If a claim is made, the two insurance companies will consult with one another to establish who pays what. In reality, this can result in claim delays or outright denials of your claim if they believe you are intentionally trying to deceive them, leaving you to front the bill.

Ultimately, two home insurance policies aren't going to provide you with a double payout, as it increases your risk of getting flagged for fraud. Instead, consider opting for additional coverage for your existing policy to ensure you're comprehensively protected and avoid double-insuring altogether when you're buying home insurance.

When would someone buy two homeowners' insurance policies?

Despite the different risks we've mentioned above, there are legitimate scenarios where someone may purchase separate policies:

1. Additional protection for high-value items

Most standard home insurance policies may provide limited coverage when it comes to compensating you for the replacement value of high-value items like expensive jewellery, electronics, and more. Homeowners may then opt to purchase high-value home insurance on top of their basic coverage to ensure they have enough insurance.

2. Shared ownership of vacation home

If you own a vacation home with multiple people, you may opt to purchase what is known as an additional interest homeowners' insurance, as it protects your interests as part-owner if a covered loss occurs.

For example, if damage to your vacation home occurs, only the person who has the home insurance policy in their name would be compensated, leaving all other owners uncovered. In this case, double insuring would protect all owners from any legal liability and other damages that may occur.

3. Renting a property

Another scenario where owning multiple policies is if you are renting your property to someone else. Normally, a landlord would have their home insurance policy in place and then purchase landlord insurance for the rental property. In this case, you’re not insuring the same property twice, so it's entirely legal and standard.

4. Concerns about being underinsured

With residential construction costs in Canada rising 67% over the last five years alone, it's understandable why many homeowners are worried that their single policy won’t cover the entire cost of rebuilding their property.

However, it's important to emphasize that two home insurance policies don't mean more coverage. Insurers will only reimburse actual losses, not duplicate payouts. Instead, we recommend adjusting your home insurance with your insurance company by reassessing what home insurance you need.

Risks and drawbacks of multiple policies

As we briefly touched on, being double-insured comes with risks and drawbacks:

Claim denials

When two home insurance policies exist, both insurance companies will go back and forth to determine who is legally responsible for covering the payout. This can either delay your payout or lead to a claim denial altogether.

Fraud concerns

Being double-insured can also lead to a fraud investigation. If it's determined that you are committing fraud, it can lead to the cancellation of your home insurance and potential criminal charges.

Unnecessary expenses

Buying insurance twice will also increase your monthly expenses unnecessarily. Having one policy with the right coverage and limits in place enables you to pay one premium while having peace of mind that you're covered against accidental damage and losses.

Cancellation of your policy

If your insurance company discovers you've been dishonest with them, they will automatically cancel your policy, leaving you exposed to risks that cause extensive and expensive property damage. Cancellations will also show on your insurance history, making it more difficult for you to purchase coverage elsewhere or find affordable premiums.

Alternatives to having two home insurance policies

Instead of paying for two homeowners' insurance plans, here are some alternatives you may want to consider:

Increase your policy limits

Work with your insurance company to increase your policy limits on your dwelling coverage and personal property coverage to ensure any damage to the physical structure of your home or belongings will be fully covered.

Add endorsements to your plan

Add additional policies to your standard insurance plan to protect yourself from specific risks. Common add-ons include sewer backup insurance, identity theft coverage, overland flood insurance, and more.

Consider umbrella insurance

Umbrella insurance offers additional liability coverage that goes beyond your standard policy limits. It's a strategic way to increase your coverage, without violating your policies' contribution clause.

Shop for a comprehensive policy

If your current insurance company fails to provide the coverage you require, look into other options. Find a comprehensive insurance plan rather than a broad insurance plan that covers all risks and removes the need for backup plans.

What to do if you already have two insurance policies

If, by chance, you already have two active home insurance plans for the same property, follow these steps immediately to avoid financial or legal consequences:

1. Review your policies

Take a look at both of your plans to determine what is and isn't covered, policy limits, and your deductible amounts. Pay close attention to any “other insurance” clauses that may be listed in your policy details, and check if both providers are aware that you have dual policies.

2. Speak with your insurance advisor

An insurance agent from your company can help you assess whether the two policies are necessary in your situation, and if not, which policy to keep. They can also help you adjust the policy you choose to keep and ensure that you do not have a coverage gap.

Avoid double insuring: Contact BrokerLink for specialized coverage today

While it's legal to have two home insurance policies in Canada, it’s rarely a good idea. Doubling up on policies can create complications during your claims process, lead to fraud investigations, and cause you to pay unnecessary costs. Instead, enhance the current coverage you have by increasing your policy limits, choosing additional endorsements, or opting for umbrella coverage. If you're still unsure, speak with a licensed broker from BrokerLink.

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