Home insurance vs. homeowners insurance

If you own home insurance in Ontario or anywhere else in Canada, you're likely also familiar with the term homeowners insurance. These terms are often used interchangeably, leaving Canadians to wonder, “Are home insurance and homeowners insurance the same thing?” The short answer is yes.

What's the difference between home insurance vs. homeowners insurance?

Absolutely nothing! Home insurance and homeowners insurance coverage are two interchangeable terms that mean the exact same thing: home insurance for homeowners.

You might also hear the term “property insurance” used in place of home insurance, and it also means the same thing. Home insurance is a type of property insurance for homeowners. Now that we’ve cleared that up, let’s dive into what a homeowners insurance policy is all about.

How does homeowners insurance work?

A standard homeowners insurance policy typically covers four main things: damage to the inside and outside of your home, loss or damage to personal belongings, injuries that happen on your property, and living expenses if your home becomes temporarily unlivable. You agree topay for home insurance either monthly or annually, and in return, your insurance company agrees to protect your home from insured perils up to your coverage limits. Here's how home insurance limits, deductibles and payouts work:

Limits

Your home insurance policy limit is the maximum amount your insurance company will pay for a claim. Each type of coverage in your policy has its own limit, so it’s important to know how much protection you have in different situations. For example, your contents coverage may have a limit of $30,000, while your personal liability coverage may have a limit of $1 million.

Sometimes, you get to choose the coverage limits for your home insurance policy. But in other cases—like if you have a mortgage—your lender might require a certain amount of coverage to protect their investment.

Deductibles

With homeowners insurance, if you ever need to file a claim, you'll usually have to pay a deductible first. This is the amount you pay to your insurance company before they cover the rest of the claim.

For example, if your home suffers $20,000 worth of covered fire damage and your deductible is $1,000, the insurance company would pay the remaining $19,000.

Payouts

And when it comes to payouts, insurance providers factor in depreciation, meaning they consider the age, condition, and lifespan of damaged items before calculating what they’ll cover. Then they'll determine the actual cash value of your home, which is the value of your home at the time of the loss, taking into account depreciation.

However, if you have replacement cost coverage, your insurance will cover the cost to rebuild your home with similar materials and quality, without factoring in depreciation. This means you’ll get enough to replace what was lost, rather than just the depreciated value of your home.

What does homeowners insurance cover?

The purpose of insurance for your home is to act as a safety net for your house and everything in it. You can often choose between basic, broad and comprehensive home insurance. It helps cover the cost if your house or belongings get damaged or stolen. Plus, it includes liability coverage—so if someone gets hurt on your property, you’re protected. And if a covered disaster forces you out of your home for a while, it can help with temporary living expenses. Let’s break these down a little more:

Dwelling coverage

Dwelling coverage is a standard and essential part of your home insurance policy. It protects the physical home itself as well as other structures on your property, even if they are detached (such as a fence, detached garage, shed, swimming pool, or gazebo). The specific risks it protects you from will depend on the policy you choose, but may include coverage against:

• Fire
• Smoke
• Lightning
• Theft
• Vandalism
• Water damage
• Falling objects
• Power outages
• and more

Dwelling coverage typically covers the repair or replacement costs of all structures and materials if the damage is caused by an insured peril, up to your coverage limit.

Contents coverage

We’ve covered how homeowners insurance protects your home’s structure, but what about all the things inside that matter to you? That’s where contents coverage comes in. Also sometimes referred to as personal property coverage, it helps cover your belongings—everything from clothes and furniture to electronics and appliances —up to your coverage limit.

And speaking of coverage limit, it's important to note that contents coverage also has coverage limits for specific items, so if you own high-value items like artwork, musical instruments, or jewelry, it’s a good idea to make sure they’re included in your policy and that you have a high enough coverage limit to replace them. If you don't, you may need to add a high-value endorsement to your coverage; that way, if someone ever breaks in and steals them, your insurance can help cover the cost of replacing them.

Personal liability coverage

Personal liability coverage or liability insurance is there to protect you if someone gets hurt on your property or if you accidentally damage someone else’s property. It helps cover medical bills, repair costs, and even legal fees if needed.

For example, let’s say a guest slips on your icy walkway and gets seriously injured. With personal liability coverage, your insurance can help pay for their medical expenses, any necessary personal property repairs (such as a $1,000 cell phone that broke during the fall), and even legal costs if they decide to take the matter to court.

Additional living expenses coverage

This part of your homeowners insurance policy has your back if your home ever becomes temporarily unlivable. It helps cover the cost of a hotel or rental, so you have a place to stay, or extra expenses like meals if you can’t use your kitchen. Basically, it makes sure that even if life gets turned upside down, you won’t have to worry about where you’ll stay or how you’ll handle the basics.

Additional coverage options for homeowners

While standard homeowners insurance covers most of what you need, there are some gaps that you may want additional coverage to fill in. For example, homeowners insurance only covers certain types of water damage, such as a burst pipe. Here are some popular options for additional coverage:

Sewer backup coverage

Sewer backup coverage is an extra layer of protection for your home in case of water damage caused by a backed-up sewer. This kind of damage can be serious and expensive to fix, so having coverage can be a lifesaver.

Overland water coverage

Overland water coverage is a type of flood insurance that helps cover water damage from things like overflowing rivers, heavy rain, or rapid snowmelt. Unlike sewer backup coverage, which deals with water coming up from drains, this protects you if water comes onto your property from outside sources. If you live near a lake, river, or in an area with heavy rainfall in Canada, adding this coverage could be beneficial.

Home business coverage

With more people working from home than ever, home business coverage has become a popular add-on to homeowners insurance. It’s great for anyone running a business from home or even employees who work remotely and need extra protection. Most standard home insurance policies don’t cover business-related losses, so if you want coverage for things like equipment, inventory, or liability, you’ll need to add a home-based business endorsement or look into a separate commercial policy.

How much does home insurance cost?

The truth is that home insurance costs vary from person to person, so there’s no one-size-fits-all answer. That said, the average cost of home insurance in Canada varies significantly by province. For example, in Ontario, it's around $1,500, while in Alberta, it's around $2,300.

How much you pay depends on a variety of factors that insurance companies use to assess risk and set your premium. Some of the biggest things they consider include:

• The value of your home
• The size of your home
• The age and condition of your roof
• The heating system in your home
• The electrical system in your home
• The plumbing system in your home
• The neighbourhood you live in
• How close your home is to emergency services
• What type of home alarm system you have
• If you have any additional structures on your property
• Your chosen coverage options
• Your deductible and coverage limits
• Your claims history

Is homeowners insurance mandatory in Canada?

In Canada, homeowners aren’t legally required to have home insurance, but if you’re getting a mortgage, your lender will likely require it before approving your loan. It’s their way of protecting their investment.

But even though home insurance isn’t mandatory, it’s definitely in your best interest to have it. It helps cover the cost of repairing or replacing your home and belongings if something unexpected happens, like a fire, windstorm, or hail damage. Without insurance, you’d be on the hook for all the repair or replacement costs yourself, including damage to your home, garage, or other structures on your property.

But it’s not just about the building—home insurance also covers your personal belongings and includes liability protection. That means if you accidentally damage someone else’s property or someone gets hurt on your property and decides to sue, your policy has you covered.

And don't forget that if your home is ever damaged to the point where you can’t live in it temporarily, your home insurance can help pay for a place to stay, along with extra expenses like meals.

Homeowners insurance vs. water damage

In Canada, most home insurance policies cover water damage caused by sudden and accidental leaks or overflows. This can include things like:

• Burst water pipes
• Leaks from heating, plumbing, or air conditioning systems
• Clogs or backups in eavestroughs, downspouts, or ice dams
• Overflow from household appliances like washing machines or water heaters
• Water entering through a sudden, accidental opening caused by another covered event—like a tree branch crashing through a window
• Damage from swimming pools and their attachments

Water damage isn’t always from storms—leaky pipes and appliance malfunctions are common culprits, too.

However, water damage due to situations like sewer backups or overland flooding is not generally covered by home insurance unless you add additional coverage. Also, if your pipe bursts due to freezing in an unheated part of your home, that typically isn't covered either. Further, it generally doesn't cover any type of water damage if your home has been vacant for 30 days or more. It is important to have someone check your home at least every 72 hours if it is vacant. Finally, if the water has been seeping for an extended time, that also likely won't be covered—it has to be sudden and accidental.

When it comes to water damage, it’s important to check exactly what your policy does and does not cover.

How to buy home insurance

You don’t have to wait until you officially own your home to get insurance—you can set up a policy in advance to start on your closing date. And if you plan to get a mortgage, then as we mentioned, you'll likely need it to get approval for the mortgage. Here’s how the process usually works:

Start by comparing providers. Check online, call different insurers, or talk to a local broker like BrokerLink to find the best coverage options.

Then, you'll fill out the quote form and share your home details. You’ll need to provide info like the property type, address, and the date your coverage should start. You'll also need to disclose any extra details, like if you own any high-value items, security systems, or have any past claims that might affect your policy. Finally, you'll enter your personal and contact details to get things moving.

Once you’ve done that, you’ll receive a quote with all the policy details. Some insurers might call you to finalize things, while others let you buy the policy online instantly. Thankfully, the entire process is really easy.

Get in touch with BrokerLink for a free home insurance quote

If you want to learn more about homeowners insurance coverage, get in touch with BrokerLink today. Here at BrokerLink, we’re here to help you with any insurance needs you may have. Our specialty is finding the most comprehensive coverage at the best rates.

You can reach us by phone, by email, or in person at any one of our locations throughout Canada. No matter how you choose to get in touch, a BrokerLink insurance advisor will be happy to assist you. We also encourage you to take advantage of our free online quote tool that can provide you with a competitive quote in minutes.

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