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Home>First Time Homebuyers>Understanding the Different Types of Insurance When Buying a Home

Understanding the Different Types of Insurance When Buying a Home

Buying a home is one of the biggest investments you’ll make in your lifetime — and protecting that investment is just as important as finding the perfect property. There are several types of insurance you may need (or want) when purchasing a home in Canada. Here’s a breakdown to help you understand each one and why it matters.

1. Mortgage Default Insurance (High-Ratio Insurance)

If your down payment is less than 20%, mortgage default insurance is mandatory. This type of insurance protects the lender, not the buyer, in case you are unable to make your mortgage payments.

Key facts:

  • Required by law for high-ratio mortgages.

  • Provided by CMHC, Sagen, or Canada Guaranty.

  • The premium is added to your mortgage and paid off over time.

  • Helps make homeownership accessible with smaller down payments.

2. Home Insurance (Property Insurance)

Home insurance is essential and must be in place before your mortgage can close. It protects your home against damage caused by fire, theft, vandalism, natural disasters, and more.

What it typically covers:

  • The physical structure of your home

  • Personal belongings inside the home

  • Liability coverage in case someone gets injured on your property

Most lenders will ask for proof of home insurance before advancing mortgage funds.

3. Title Insurance

Title insurance protects you, the homeowner, against losses related to the legal ownership of the property.

It can cover:

  • Unknown title defects

  • Liens against the property (from unpaid debts by previous owners)

  • Errors in public records or surveys

  • Fraud or forgery related to ownership

While not mandatory, many legal professionals recommend it — and some lenders require it as well.

4. Mortgage Life & Disability Insurance

This optional insurance provides peace of mind by covering your mortgage payments if you become critically ill, disabled, or pass away during the mortgage term.

Benefits include:

  • Financial protection for your family

  • Helps avoid defaulting on your mortgage during unexpected life events

  • Available through banks, brokers, and independent insurance providers

It’s worth comparing policies and understanding what’s covered and for how long before committing.

Bonus: Other Insurances to Consider

Depending on your location and personal situation, you may also want to look into:

  • Critical Illness Insurance

  • Job Loss Insurance

  • Earthquake or Flood Insurance (especially if you live in higher-risk areas)

Final Thoughts

Insurance might not be the most exciting part of homeownership, but it’s absolutely one of the most important. It protects your home, your finances, and your family’s future.

If you’re unsure which insurances you need or where to start, I’m here to help guide you every step of the way — including connecting you with trusted insurance professionals.