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What Does Home Insurance Cover in Canada?

What Does Home Insurance Cover In Canada? | KBD Insurance
Curtis Killen

As president of KBD, Curtis aims to simplify insurance for his clients. He’s helped lead KBD to become one of Canada’s fastest 400 growing companies according to the Globe & Mail.

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Wondering what home insurance coverage you need? Whether you’re a first time home buyer, or have recently made renovations, we’ve got you covered in this post. We’re sharing what you need to know to make sure that your property is fully protected.

So, what does home insurance cover exactly? 

Whether you’re a first-time homeowner or you’re considering updating your policy, understanding the ins and outs is key.

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From protecting your property to safeguarding your financial security, we’re breaking down everything you need to know about what home insurance covers. 

OR, if you’re ready for a home insurance quote, we’ve got you covered there too.

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Click ahead to learn what you need:

What does home insurance cover in Canada?

So, you’re purchasing your first home and want to know what insurance coverages you need?

Let’s break it down:

  1. Property/dwelling coverage: One of the primary components of home insurance is dwelling coverage (also known as property coverage). This aspect of the policy protects the physical structure of your home against various perils, including fire, theft, vandalism, and certain natural disasters such as windstorms and hail.
  2. Personal property coverage: In addition to safeguarding the structure itself, home insurance also typically covers your personal belongings. This includes items like furniture, electronics, clothing, and appliances, whether they’re inside your home or temporarily outside, such as in your car or on vacation.
  3. Liability protection: Home insurance doesn’t just protect your property; it also offers liability coverage. This means that if someone is injured on your property and you’re found legally responsible, your home insurance policy can help cover their medical expenses and legal fees.
  4. Additional living expenses: If your home becomes uninhabitable due to a covered peril, such as a fire or severe storm damage, home insurance often includes coverage for additional living expenses. This means it can help pay for temporary accommodation, meals, and other necessary expenses while your home is being repaired or rebuilt.

Types of home insurance policies

Home insurance provides comprehensive protection for your property, belongings, liability, and more. 

In Canada, there are different types of home insurance policies to choose from, including comprehensive, basic, and broad forms. 

Each type offers varying levels of coverage and can be tailored to suit your specific needs and budget when you speak with your home insurer.

By understanding what home insurance covers and exploring the various types of policies available, you can make sure that you’re well informed and properly protected.

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Will home insurance cover loss of income?

Home insurance doesn’t cover loss of income resulting from events like job loss or business downturns. 

If you are a homeowner that rents out a portion of your house, you will be required to take out landlord insurance, which will cover loss of income related to your rental property. 

This coverage is designed to cover the loss of rental income if there’s a claim and your tenants have to temporarily vacate the unit. 

However, there are scenarios where loss of income may be indirectly covered with home insurance under specific circumstances:

Loss of use coverage

Home insurance often includes loss of use coverage, which can help cover additional living expenses if your home becomes uninhabitable due to a covered peril, such as fire or severe damage. 

While this doesn’t replace lost income, it can alleviate financial strain by covering expenses like temporary accommodation, meals, and transportation.

Home-based business coverage

For those operating a business from home, some home insurance policies offer endorsements or add-ons to cover loss of income related to the interruption of business operations due to a covered peril. 

This coverage can help compensate for lost revenue and ongoing expenses during the period of disruption.

Special Considerations

Now that you know the ins and outs of home insurance coverage, let’s get into specific considerations. 

As a homeowner, it’s important to review your policy carefully and discuss specific coverage needs with your insurer. 

Additionally, individuals relying heavily on income from home-based businesses should inquire about additional coverage options to protect against potential loss of income.

If this is the case for you, you should also consider commercial insurance for your home-based business. 

In summary, while home insurance typically doesn’t directly cover loss of income, certain aspects of the policy, such as loss of use coverage and endorsements for home-based businesses, can provide financial support during challenging times. 

By exploring coverage options and consulting with your insurer, you can better protect your home.

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Does house insurance cover vehicle contents?

Home insurance does typically cover personal belongings, including items kept in your vehicle under certain conditions:

  • Off-premises coverage: Most home insurance policies include off-premises coverage, which means your personal belongings are covered even when they’re not within the confines of your home. This coverage can extend to items stolen from your vehicle, such as laptops, electronics, and personal effects. However there can be limitations to coverage amounts, depending on your policy. 
  • Limitations and deductibles: While home insurance may cover vehicle contents (aka: belongings within the vehicle), it’s essential to review your policy for any limitations or deductibles that may apply. Some policies have sub-limits for certain types of belongings, and deductibles may still apply, which you will have to pay upfront out of pocket.
  • Exclusions: Certain high-value items or specific types of property may be excluded from coverage under your home insurance policy. It’s crucial to understand these exclusions and consider additional coverage options if necessary, such as scheduling valuable items separately or purchasing specialized insurance for specific belongings.

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Does homeowners insurance cover accidental damage?

So, is accidental damage to your property covered in your home insurance policy?

Home insurance policies typically provide coverage for accidental damage under certain circumstances:

Standard Coverage

Many home insurance policies include coverage for accidental damage to your property, such as accidentally breaking a window or spilling paint on the carpet. This coverage can help cover the cost of repairs or replacement, providing financial protection against unexpected mishaps.

Exceptions and Limitations

While accidental damage may be covered under home insurance, it’s essential to review your policy for any exceptions or limitations that may apply. Some policies may have specific exclusions for certain types of accidental damage, or there may be limits on the amount of coverage available for such incidents.

Optional Coverage

For homeowners seeking broader protection against accidental damage, some insurers offer optional endorsements or add-ons that can be added to their home insurance policy. These additional coverages may provide enhanced protection for a wider range of accidental damage scenarios.

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What is an example of accidental damage home insurance?

When you’re considering home insurance coverage options in Canada, it’s essential to understand what types of accidental damage may be included in your policy.

That way you won’t come across any unwanted surprises. 

Home insurance policies typically cover a range of accidental damage scenarios, including:

  1. Broken windows: Accidentally breaking a window during a household accident is often covered by home insurance. This coverage can help pay for repairs or replacement of the damaged window.
  2. Water damage: Accidental water damage caused by incidents like burst pipes, overflowing bathtubs, or appliance malfunctions may be covered by home insurance. This coverage can help mitigate the cost of repairing water-damaged floors, walls, and belongings.
  3. Accidental fires: In the event of an accidental fire caused by cooking mishaps, electrical faults, or other unforeseen circumstances, home insurance typically provides coverage for damage to the structure of the home and personal belongings.
  4. Damage to personal property: Accidental damage to personal property, such as dropping and breaking expensive electronics or spilling paint on furniture, may also be covered by home insurance.
  5. Accidental liability: Home insurance may also provide coverage for accidental liability, such as accidentally injuring someone on your property or damaging a neighbor’s property.

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Do I need accidental damage coverage on building insurance?

Accidental damage coverage provides additional protection against unforeseen events that may cause damage to the structure of your home. 

And the more comprehensive your home insurance, the more prepared you will be for a range of possible claims. 

Here’s what accidental damage coverage protects against:

  • Mitigating financial risk: This coverage can assist with repair or replacement costs for damages caused by accidental events such as DIY mishaps, falling objects, or vehicle collisions.
  • Protecting against unforeseen circumstances: While standard buildings insurance typically covers damages caused by specific perils like fire, theft, and natural disasters, accidental damage coverage extends this protection to include a wider array of potential risks and liabilities.
  • Peace of mind: Having accidental damage cover on your buildings insurance provides peace of mind, knowing that your home is adequately protected against events that may occur unexpectedly.

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So, to recap: what does home insurance cover?

In general, your home insurance policy will cover:

  • Fire insurance
  • Water and flood insurance 
  • Liability insurance

However, as a homeowner, it’s important to understand your coverages to make sure that you’re well-prepared in the event that there’s a covered loss and you need to make a claim.  

So, whether it’s protecting your property from unforeseen events or securing your financial well-being, having the right coverage brings peace of mind.

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