Insurance is a crucial part of financial planning – it provides security and peace of mind when unexpected occurs.
In this article, we’ll break down six key types of insurance in Canada – home, car, life, travel, tenant, and condo insurance – and explain what they cover, why you might need them, and how to find the best options for your needs.
Home insurance
While home insurance isn't legally required, it's a safety precaution all fiscally responsible homeowners should take. A home is often a person’s biggest asset. If you don’t have home insurance, a house fire could mean your lifesavings and financial security literally going up in flames.
If you have a mortgage on your house, it is almost a certainty that your lender will require you to have home insurance. They have a stake in your home, and they're going to want you to protect it.
What's generally covered by home insurance
Your home insurance coverage will vary based on what your agreement states. At a minimum, here's what most policies cover:
- Personal liability
- Personal property
- Structural damage to your home
- Theft or loss of property
- Accidental damage to other properties
The amount covered in each of these categories also varies based on the company and your agreement. You'll likely see significant changes in your premiums if you want more or less coverage than what's listed here.
Best home insurance companies
Canadians have plenty of options for home insurance, including the 3 that have earned top Genius Ratings:
- TD Home Insurance
- Sonnet Home Insurance
- Allstate Home Insurance
Determining which one is best for you involves considering what you and your home need.
Maybe you want a local insurance company for better coverage, or maybe you want a company that specializes in rare and expensive artwork. Or perhaps you just want the best rate possible.
It's essential to read the fine details – you get what you pay for, and the cheaper quotes may not have the best customer service, which is what you'll need if something happens to your home.
Here's an overview of the top three home insurance companies:
| Company | Our product rating | Special features |
|---|---|---|
| TD Home Insurance | 5.0 | * Free advice from lawyers and contractors available for customers with bundled plans * Protection for family-related situations, such as cyberbullying and parents living in nursing homes |
| Sonnet Home Insurance | 4.3 | * Identity theft coverage included * Sonnet Connect provides discounts, promotions, and freebies from partnering businesses |
| Allstate Home Insurance | 5.0 | * Discounts for clients who are of retirement age * Mobile app is convenient and highly rated |
Car insurance
Unlike home insurance, it's mandatory in Canada to have car insurance if you own and drive a vehicle on public roads.
It's important to make sure you're getting the coverage you need and can realistically afford.
What's typically covered by car insurance
Your car insurance policy holds specific details on what is and isn't covered. This is also something you'll have to agree to when you buy your coverage for the first time.
Generally speaking, most car insurance policies cover the following:
- Personal liability
- Collision insurance
- Accident benefits insurance
- Comprehensive insurance
You can choose to add on extra coverage types, such as emergency roadside assistance, uninsured motorist coverage, etc.
Best car insurance companies
Since it's mandatory and therefore one of the most popular insurance types, Canadians have plenty of choices when it comes to car insurance companies – including options from the big banks.
The top three car insurance companies are:
- Sonnet Car Insurance
- CAA Auto Insurance
- RBC Auto Insurance
Take a look at this summary of what these companies have to offer:
| Car insurance company | Our product rating | Special features |
|---|---|---|
| Sonnet Car Insurance | 4.7 | * Optional coverage that provides reimbursement for roadside assistance expenses * Fast, precise quotes and a very pleasant digital experience |
| TD Auto Insurance | 5.0 | * Significant claims-free discount and disappearing deductible feature * TD MyAdvantage driving program rewards safe drivers |
| RBC Auto Insurance | 4.5 | * Satellite Program for emergency roadside and driver assistance * Backed by one of the country's largest and oldest banks |
Life insurance
Life insurance is another type of insurance that can make all the difference to the financial stability of your spouse and dependants if the worst should happen, and yet, isn't legally required for Canadians.
Life insurance ensures that your beneficiaries (usually your children and/or spouse) will be paid in the event of your death in order to cover any expenses and other monetary concerns you left behind.
And since even your basic funeral needs can cost upwards of $5,000 or more, this can be a big help – this doesn't even include any debts or loans you hold. Plus, since you're not there to add a potential salary to the household income, things can potentially get very tight.
What's generally covered by life insurance
Your life insurance policy holds the full details on what is and isn't covered. But in most cases, the following is likely covered to varying degrees:
- Natural death
- Accidental death
- Suicide
- Murder
Types of life insurance: permanent vs. term
You have a few different options when it comes to life insurance, but they can essentially be divided into two broad categories: term or permanent.
Term life insurance covers you for a specific term as indicated in your contract, after which it must be renewed. Since life insurance gets more expensive as you get older, you'll have cheaper premiums when you start but more expensive near the end of your life.
Permanent life insurance has premiums that are averaged over your entire life. This means you'll likely pay more than you would with term insurance when you're young, but less when you're old.
The extra money you pay when you're young goes into "reserves" which you may be able to cash out on if you cancel your insurance early, depending on your policy.
Let's take a look at the pros and cons:
| Type of life insurance | Term life insurance | Permanent life insurance |
|---|---|---|
| Pros | * Premiums are averaged out over the specified term, not rising every year * Generally lower cost when you're young | * Premiums are average out over your entire life, so they're more consistent * Generally lower cost when you're older |
| Cons | * Generally higher cost when you're older * Will need to renew more often | * Generally higher cost when you're young |
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Travel insurance
Travel insurance can cover you for a variety of events and mishaps when you're travelling, whether within Canada or internationally.
When people talk about travel insurance, they usually mean travel health insurance that covers costs related to medical emergencies when you're away from home. Canadian health insurance doesn't always cover fees and other costs you may incur in other countries.
But travel insurance can also include coverage for things like trip interruption, lost luggage, document replacement, and more. If you plan on driving during your travels, you'll also want to ensure you have driver and vehicle coverage.
Where can you get travel insurance
You can usually get travel insurance through these providers:
- Insurance companies
- Insurance brokers
- Your employer's insurance provider
- Travel agents
- Credit cards
It's important to note that credit cards often include a variety of travel insurance coverages for no additional fee.
If you're not sure what insurance your credit card includes, try downloading a copy of your credit card agreement and travel insurance certificate through the card issuer's website.
Tenant insurance
Tenant insurance is a type of home insurance for people who rent their apartment or home. Though your landlord likely has insurance that covers the building itself, they won't have anything that protects you or your belongings – so it's still important to be insured.
Should you get tenant insurance?
Though it's not mandatory in Canada, some landlords may require it as part of your rental agreement.
An easy way to decide is to look around your space and tally up the expenses of everything you own. Could you afford to replace everything if there was a fire? Could you afford to replace at least the essentials?
If the thought of these costs coming out of your bank account seems impossible, then it might be good to get some insurance.
What's typically covered by tenant insurance
Tenant insurance will generally cover you and your belongings – and since the building itself is likely covered by your landlord, your premiums will be cheaper than house insurance, which is a sweet bonus.
The three main things that are often covered by tenant insurance are:
- Contents
- Living expenses
- Personal liability
Some of the main additional coverages offered by various tenant insurance companies include:
- Protection for valuable items (i.e. jewellery)
- Water coverage
- Coverage against various natural disasters
Best tenant insurance companies
Tenant insurance isn't offered by many companies, but Canadians still have plenty of choices.
We looked at a quote for a one bedroom apartment in Ontario, and these were the top three best and most reasonably priced tenant insurance quotes of the companies we looked at:
| Tenant insurance company | Quote (per month) |
|---|---|
| Sonnet Tenant Insurance | $34.17 |
| RBC Tenant Insurance | $43.56 |
| TD Tenant Insurance | $53.33 |
Condo insurance
Like tenant insurance, condo insurance is available for people who live in a condo rather than in a house. Though it's not mandatory by most condo associations, it could still be a great help to cover you and your belongings in case of unforeseen circumstances.
What's generally covered by condo insurance
Generally speaking, your building and common areas are already insured – but not you, your belongings, or any upgrades you make to the unit.
Condo insurance steps in to fill these gaps, typically including these areas:
- Unit improvements and betterments
- Personal property
- Personal liability
Best condo insurance companies
We took a look at four popular and well-rated condo insurance companies and got a quote for a condo in Toronto.
Below are the top companies and the best prices they offer:
| Condo insurance company | Our product rating | Quote (per month) |
|---|---|---|
| TD Condo Insurance | 3.6 | $39.25 |
| Sonnet Condo Insurance | 5.0 | $55.08 |
| Aviva Condo Insurance | 2.6 | $34.24 |
Editorial Disclaimer: The content here reflects the author's opinion alone, and is not endorsed or sponsored by a bank, credit card issuer, rewards program or other entity. For complete and updated product information please visit the product issuer's website.
FAQ
Do I need car insurance?
If you're using a vehicle on public roads, Canadians must have car insurance. If you own a vehicle but aren't using it, you don't need to have it insured – although you may still want coverage for theft or damage.
What's the best way to get travel insurance in Canada?
You can purchase travel insurance through an insurance company, a broker, or your travel agent. It may be included with your credit card too as many cards include an array of valuable insurance coverage for no extra fee.
Is home insurance mandatory?
Home insurance is not required by law – but your mortgage lender will require that you have it. Even if you don’t have a mortgage, your home is likely the biggest investment you have and therefore should be protected.
Is tenant insurance mandatory?
Like house insurance, tenant insurance isn't technically mandatory, but some landlords may require it as part of the rental agreement. In any case, it's certainly a wise choice to protect yourself and your belongings, no matter where you live.
Why should I get tenant insurance?
Tenant insurance covers you when your landlord's insurance doesn't. If you don't have this insurance and someone gets hurt while on your property, or if anything you own gets stolen or destroyed, you'll have to pay out of pocket.
What does condo insurance cover?
While the building itself and public/common areas are already insured, condo insurance usually covers you and your belongings, plus any improvements you make to your unit. Though the specifics will vary from policy to policy.
What types of life insurance are there?
There are many different types, but they can generally be divided into two categories. Permanent life insurance means the premiums are averaged out over your entire life. Term life insurance needs to be renewed after a set amount of time.
How does life insurance work?
You pay monthly or annual premiums to have a life insurance policy. When you pass away, your insurance pays a "death benefit" to your benefactors. This is a sum of money meant to cover lost income and pay off debts.
Is health insurance free in Canada?
No, it's not completely free. Our healthcare system does cover the costs of many health-related services, but not everything. Having private health insurance helps to cover the costs of things like dental care, eye care, prescription drugs, etc.
Is it illegal to not have insurance in Canada?
If you own and drive a vehicle on public roads, you are legally required to have car insurance. Your mortgage lender may require you to have home insurance. Other types of insurance – including travel, tenant, and condo insurance – are recommended.
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