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What is the average house insurance cost in Ontario?

by Corben Grant on 20 May 2022

For many people, owning a home is a major dream come true – and losing their home would be a nightmare. Unfortunately, unexpected events occur every day that can damage or destroy your home, leaving you with a serious personal and financial loss. This would be understandably devastating. Luckily, with a homeowners insurance policy, you can help to mitigate damages in the event of a disaster.

No matter how safe you think you may be, it's important that you always prepare yourself for the unexpected, which is where insurance comes in. This is especially important for investors who own and operate rentals. You may own the house, but you also aren't there all the time to make sure nothing catastrophic happens. It is simply out of your hands and insurance will provide you with crucial protection as well as peace of mind.

Home insurance is incredibly common in Ontario, but it isn't such a simple thing. There are a number of different options for home insurance as well as different providers. It's good to protect yourself and your home, but you also want to make sure you are getting a good deal on your home insurance premiums which is why being informed is crucial. Again, this is extremely pertinent to investors who may own multiple different properties and end up managing many different insurance plans.

In this article, we will look at how home insurance works in Ontario, what it covers, how much you can expect to pay, and more.

Ontarians pay approximately $1,400 a year for home insurance

Home insurance costs vary between different properties and different areas, so everyone pays a different amount generally. However, in Ontario, the average home insurance cost is around $1,400 a year (around $120 a month).

The actual range of home insurance is pretty wide as there are many factors that come into play. Some homeowners pay closer to $700 a year while others may pay above $2,000. In addition, insurance costs have been gradually on the rise every year which we will explore more later.

What determines the price of home insurance?

Home insurance is designed to cover some of the costs in the event of various accidents that can happen while you own your home. Because no two homes are exactly the same, no two insurance policies are the same either. Even homes that are built to the exact same specifications may have different insurance plans based on the use of the home, the valuables inside of it, and the owner's own insurance preferences and risk profile. Here are some of the major factors that determine your home insurance premiums:

Home construction, condition, and age

One of the biggest factors in your home insurance price will be your home itself.

For one, the size of the home will increase the costs of repairs in the event of a loss. Another factor that may impact your home's insurance cost is the age of the home. The age of a home can increase the likelihood of damage and can also lead to other issues like older standards of wiring or plumbing that may fail sooner. Other factors about your home may increase your insurance costs like expensive materials or high-risk amenities like a fireplace.

Location

Beyond the structure of your home, location can play an important role in your insurance costs. Different areas can make claims more or less likely as a result of things like higher crime rates or weather events, for example.

Ways you can impact your insurance premiums

Finally, you have some say in your home insurance cost based on the policy you opt for. For example, you may wish to include more of your valuables under your home insurance policy. On the other hand, you could do things like opting for a higher deductible, installing an alarm system, bundling home and auto insurance, or comparing rates with other companies, all of which can help to land you a smaller home insurance premium.

How much should I pay for Ontario homeowners insurance?

Some things that make up your home insurance costs are out of your hands. For example, you can't simply move your home to a new area with lower insurance. However, for the things that are in your control, you will need to evaluate how much you are willing to pay with how much risk you are willing to take. There is no strict answer on how much insurance you should have, rather, it depends on your own personal risk tolerance and financial capabilities.

For example, you could cover less of your valuables against loss which would make your insurance premiums lower but also leave you at higher risk. You could opt for a basic plan to save money, but you won't get coverage for anything beyond a limited scope of claims.

There are many things that you may be able to comfortably cover yourself without making a claim and these may be areas where you can reduce your insurance costs. However, for anything for which the replacement cost would be prohibitively expensive, you should seriously consider getting insurance coverage.

Does renting affect my insurance?

If you wish to rent out your home to tenants, you will need to get a different sort of home insurance policy known as landlord insurance. Landlord insurance differs from regular home insurance in a few areas. For example, it does not cover any of the belongings of your tenants, who will need their own renter’s insurance.

Things landlord insurance covers that home insurance may not include increased liability coverage, as well as insurance for lost rental income in the event of a home being rendered unrentable. In general, your landlord insurance policy will be more expensive than a regular home insurance policy, but it will provide you important coverage for situations unique to rentals.

Who pays the most for home insurance?

According to data from Ratehub on the average home insurance rates in different Ontario cities, homeowners in Toronto pay the highest for home insurance, with Hamilton and Windsor taking the second and third spots respectively.

There are a number of reasons that make certain areas more expensive in terms of home insurance. For one, in larger cities, there might be more risks of property damage from other people. In addition, many of the areas high on the list have high home values. Home insurance costs are not tied to home values and are more related to replacement costs, however, in a city like Toronto, building costs may be higher due to factors like construction permits and workers' wages. Also, people with more expensive homes tend to have more expensive belongings which cost more to insure. Finally, homes in well-developed cities can tend to be older than in other areas.

These are only some of the reasons why some areas may be more expensive, but it goes to show how complex the matter of insurance prices can be.

Who pays the most in Canada?

When looking at Canada as a whole, unfortunately, home insurance in Ontario is the most expensive of all provinces. The Atlantic provinces tend to pay the least, with prices in the $700-$800 range on average.

Why are insurance costs rising?

Insurance costs, like most things in our country, tend to increase over time. When homeowners look at the difference between their current payments and last year's, they may be shocked to see how quickly things have increased. Just what causes insurance premiums to increase, even when they are covering the same home?

Cost of materials

One of the biggest factors driving up home insurance is the cost of materials needed to rebuild homes that have been damaged. In the last couple of years, thanks to supply chain issues resulting from the pandemic, the cost of building materials has gone up, so insurance must increase as well to cover this increase.

Weather-related claims

Another concerning factor increasing the cost of insurance is weather-related claims, largely linked to changing climate conditions. Already, we have begun to see the effect of climate change as it begins to create more severe and damaging weather conditions. These sorts of events will likely only increase in the coming years as the problem worsens.

Conclusion

It’s no surprise why home insurance is so popular among homeowners. Even if the cost seems high, when it comes time to actually make a claim, you will certainly be happy you paid into your home insurance policy. There are many different types of home insurance coverage and ways you can make your premiums lower. Regardless of what you choose, home insurance is recommended for any homeowner who wants to live in and enjoy their home with peace of mind knowing they are protected from disaster.



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