Keep reading to find out how they’re different but equally important, and why you should consider both.
Home insurance is what you would get to protect your home and its contents. It’s not mandatory in Ontario to carry home insurance, but it’s a very good idea because having to go out of pocket to replace your home and all of its contents after, say, a fire or a flood is probably something you don’t want to do. And if you have a mortgage, chances are that your lender requires you have home insurance.
Mortgage insurance is what you would get to protect your lender in case you, for whatever reason, can’t come up with the money to pay your mortgage.
Whenever a borrower purchases a property with less than 20% down payment in Canada, they must get default insurance from one of the three main mortgage insurers: CMHC, Sagen (formerly Genworth) or Canada Guarantee.
Costs of home insurance vs. mortgage insurance
The cost of your home insurance will be a fixed rate based on factors including where your home is and how much it would cost to replace it or buy a similar home in case of a total loss.
On the flipside, the cost of mortgage insurance will be a percentage of your mortgage and will be rolled into your monthly payment. Generally speaking, the cost of mortgage insurance is between 1 and 4% of your mortgage.
Particulars of home insurance vs. mortgage insurance
Mortgage insurance is one product: protection for your lender. Home insurance, however, can be a combination of products you can customize to suit your needs.
First, you’d start with the home insurance that best fits with your living situation:
- Homeowner insurance (for owners): This will cover your private residence, protect the contents of your home and your liability if someone gets hurt in your home.
- Tenant insurance (for renters): Also called renters insurance, it will protect your belongings and give you liability coverage. It doesn’t protect the home itself, but that’s fine because you don’t own it.
- Condo insurance (for owners who live in a condo): Condo insurance will protect your unit within a condo building, including the contents of the unit like appliances, clothing and furniture. It will also cover additional living expenses if you need to relocate while your condo is being repaired.
- Seasonal insurance (for vacation properties): Insurance for seasonal homes will typically cover the outdoor structures on your property, the contents of your seasonal home and provide liability coverage.
From there, you can add more coverages, depending on what your home insurance provider offers.
For example, Onlia offers home sharing insurance if you want to monetize your property by listing it on the short-term rental market. Or you can add extra coverage for valuables like jewelry, art or collectibles.
But before you buy home insurance…
It’s strongly recommended that you do some research into your options and consider what kind of insurance you think you’ll need today and into the future. You’ll want to find a provider that suits your needs now, and that has options for coverages you may want to add in the future.
Now you’re ready for home and mortgage insurance
More specifically, you’re ready to choose the right policy for you. See what Onlia home insurance has to offer, get a quote online and customize your home insurance coverage today.