Home Insurance When Buying a House in Ontario

Most buyers focus on the down payment and land transfer tax — then learn, days before closing, that they also need home insurance in place to get the keys. In Ontario, lenders won't fund your mortgage without proof of coverage. This guide explains what home insurance covers, why it's mandatory, and how it fits the rest of your closing costs.

Key takeaways

• Lenders require proof of home insurance before they'll advance your mortgage at closing.
• Home insurance protects the building, your belongings, and your liability.
• It's an ongoing premium, not a one-time closing fee — but the first payment is due before you close.
• It is different from title insurance and mortgage default (CMHC) insurance.
• HOMEH gives eligible buyers the industry's highest Cashback Rebate to offset your overall costs.

Why home insurance is mandatory for a mortgage

When you take out a mortgage, the lender is helping finance an asset they need protected. If the home burned down uninsured, the lender's security would vanish. That's why virtually every Ontario lender requires proof of an active home insurance policy — naming the lender as a payee — before they'll release the mortgage funds on closing day.

Practically, this means you should line up a policy as soon as your purchase is firm. If you can't show coverage, the closing can stall. Plan for it alongside your other closing costs and avoid the trap in closing cost mistakes to avoid.

What home insurance actually covers

A standard home insurance policy generally bundles three protections:

• Building / dwelling — repairs or rebuilding after fire, storms and other covered damage.
• Contents — your belongings inside the home, often up to a set percentage of the dwelling coverage.
• Liability — if someone is injured on your property and you're found responsible.

Condos are different

If you buy a condo, the building structure is covered by the corporation's master policy. You insure your unit's interior, contents and liability — usually a lower premium. Review the condo's coverage in the status certificate.

Home insurance vs the other 'insurances'

Buyers often confuse three very different policies. Here's the distinction:

Title insurance is a one-time closing cost — see what is title insurance. CMHC protects the lender when your down payment is under 20% — see CMHC mortgage insurance. Home insurance protects you.

How it fits your closing budget

Home insurance is an ongoing cost rather than a one-time closing fee, but because the first premium must be active before closing, treat it as part of your move-in budget. Premiums vary with the home's value, location, and coverage level, so quote your specific property rather than assuming an average. Get the full picture of one-time costs with the closing cost calculator.

Shop before you firm up

Get an insurance quote before your offer becomes firm. Some homes — older wiring, certain heating types, flood zones — are pricier or harder to insure, and you'll want to know before you're committed.

Spend less overall with HOMEH

You can't skip home insurance, but you can offset the cost of buying. HOMEH gives eligible buyers the industry's highest Cashback Rebate — money that can cover your first year's premiums, your closing costs, and far more. Estimate yours with the cashback calculator and check affordability with the affordability calculator.