Opinion: The Bank Of Canada's Subtle Housing Warning

Insurance

Explore how insurance works in Canadian real estate — what types exist, why they’re required, and how they protect buyers, lenders, and homeowners.

Insurance

May 22, 2025


What is Insurance?

In real estate, insurance refers to coverage that protects homeowners, lenders, and investors from financial loss due to property damage, liability claims, or other risks.

Why Insurance Matters in Real Estate

In Canadian real estate, insurance is essential for mitigating risk and meeting legal or mortgage lender requirements. Key types include:

Homebuyers must show proof of insurance before closing, and policy limits, deductibles, and exclusions vary.

Understanding insurance allows homeowners and buyers to properly assess risk, select appropriate coverage, and protect their property investment.

Example of Insurance in Action

The buyer provides proof of home insurance with $1 million in liability coverage as a condition of their mortgage approval.

Key Takeaways

  • Provides financial protection from real estate risks.
  • Required by lenders before closing.
  • Includes multiple coverage types.
  • Essential for all property owners.
  • Policy details must be reviewed carefully.

Related Terms

  • Home Insurance
  • Title Insurance
  • Mortgage Insurance
  • Liability Coverage
  • Coverage Limit

Additional Terms

Recourse Loan

A recourse loan is a type of loan where the lender can pursue the borrower’s personal assets, beyond the collateral, in the event of default.. more

Pari Passu

A pari passu clause is a contractual provision ensuring that multiple creditors share equally in repayment priority from the borrower’s assets.. more

Non-Recourse Loan

A non-recourse loan is a type of loan where the lender’s only remedy in case of default is to seize the collateral property; the borrower is not. more

Net Operating Income

Net operating income (NOI) is the total income generated by a property after operating expenses are deducted but before taxes and financing costs.. more

Mechanic's Lien

A mechanic’s lien is a legal claim by a contractor, subcontractor, or supplier for unpaid work or materials provided for a property.. more

Lis Pendens

Lis pendens is a legal notice filed in the land registry indicating that a property is subject to ongoing litigation that may affect its title.. more

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