Insurance guide for newcomers to Canada

Canadian insurance basics

Personal insurance exists to protect you, your family, or your stuff from unexpected losses.

The most common forms of personal insurance are home insurance, car insurance, and health insurance. We’ll also briefly talk about travel medical insurance for new arrivals or people seeking a super visa for their family members. And, we’ll touch on life insurance.

In Canada, most insurance laws are made by the provinces and territories. Some things are different depending on where you live, but most differences are small. The information here, as much as possible, applies to all provinces and territories (unless it says otherwise).

When shopping for insurance in Canada, it’s common to get quote from more than one company. To get a quote, you’ll provide information as though you were going to buy a policy. Then, the insurance company can tell you what it would cost and what your coverage would look like if you decided to purchase.

What to look for while insurance shopping

Price. One of the main things people care about when buying insurance is how much it costs. The money you pay for insurance is called a premium, or sometimes a rate. Insurance companies calculate premiums differently, which is part of why it’s good to get quotes from multiple companies.

Coverage. Every insurance policy describes what or who it protects. It also specifies which types of loss are covered (like fires, lawsuits, or car accidents). When comparing insurance policies, pay attention to exclusions — these are things the policy will not cover. Comparing insurance coverage is hard, because many companies write in hard-to-read legal language. Of course, you can always ask a company’s agents for help. This gives you a chance to test that company’s customer service as well. You can also look for a provider with plain-language policies.

Limits. Every type of insurance has limits. Most policies have limits for each type of coverage. For example, a home insurance policy might have a limit of $250,000 for the house and $50,000 for the contents of the house. When comparing policies, consider the limits within each one. Most of the time, you can choose some limits yourself.

Deductibles. A deductible is the amount of money you will have to pay when you make an insurance claim, before your insurance company pays the remaining cost of covered damage or loss. You usually won’t have to pay it directly — it will be taken out of your claim settlement money. A low deductible means more coverage, but you will pay a higher price for it. Most insurance companies let you choose a deductible.

The cancellation policy and term. Many insurance contracts have a term of one year. After the term is over, the insurance company may offer a new contract with a new price (known as a renewal). Many Canadians use renewal time to shop around for a cheaper policy for the upcoming year. If you cancel before the term is over, you’ll receive a partial refund — though you’ll often have to pay a penalty. Some policies are not fixed-term policies, and you can cancel at any time without a penalty. Home insurance policies from Square One don’t have a fixed term, for example.

Home insurance

Home insurance is a term that includes several similar kinds of insurance, including:

• Homeowner’s insurance, for people who own their home.
• Tenant insurance (or renter’s insurance), for people who rent their home.
• Condo insurance, for people who own a condo property.

In Canada, home insurance is not required by law. But, anyone who owns their home and has a mortgage will have to keep it insured as a condition of their mortgage. Also, landlords may require renters have tenant insurance. So, sometimes you will need home insurance even though the law doesn’t require it.

Below are the basic types of coverage inside each home insurance policy. Click the links to learn more about each one:

• Building coverage covers the cost of repairing or rebuilding a house or other type of home. Tenant insurance doesn’t include this, because renters don’t own their home and aren’t responsible for insuring it.
• Contents coverage covers moveable stuff. That includes electronics, furniture, clothing, and everything in between. Some specialty items, like jewellery or collectibles, may have separate limits or exclusions.
• Liability coverage covers legal costs and damages if you’re found legally liable for accidentally injuring someone or damaging their property, or if someone is injured while visiting your home.
• Additional living expenses coverage is for extra costs that arise if you have to move out of your home following a covered loss (like a fire). That includes things like a temporary hotel room or increased commuting costs.

Some providers offer extra, optional coverages on top of the basics. That includes things like Square One’s legal protection or tenant’s protection coverages.

Buying a home insurance policy

Usually, people will get home insurance quotes from different providers to compare prices and coverage. Many providers let you get a quote or buy a policy online. That includes Square One — online home insurance is our specialty.

The price of home insurance depends on many things, which the application will ask you about. That includes where the home is located, your personal information and claim history, and the amount of coverage you wish to buy.

It’s important to provide accurate information on the application form. Insurers need this info to calculate the correct price, and lying on an application will void the policy (meaning it isn’t valid and you have no coverage).

When comparing home insurance quotes, don’t just look at the price. Consider the coverage, limits, and exclusions as well. If you spoke with any agents, consider the customer service experience, too.

Car insurance

By law, all drivers in Canada must have car insurance. For a more detailed look at car insurance in Canada for newcomers, visit our complete guide. But, here are the basics:

When you buy car insurance, the policy is attached to the car, not the driver. Every vehicle needs its own insurance coverage, and you can’t drive an uninsured vehicle even if you bought insurance for a different vehicle.

There are several coverages that are part of all car insurance policies, though some are optional. Insurance companies won’t sell policies that offer less than the legal minimums.

Here’s a summary of the main car insurance coverages in Canada (click the links to learn more about each one):

• Third-party liability coverage is mandatory for all drivers in Canada. It covers you if you damage someone else’s property or injure them while driving your vehicle. The minimum limit is between $50,000 and $500,000 depending on your province, but insurers usually recommend at least a $1 million limit.
• DCPD (or Direct Compensation Property Damage) only exists in some provinces. If your vehicle is damaged and it’s not your fault, DCPD will pay for the repairs. It’s required in the provinces where it exists, except where opt-out options have been made available by regulators.
• Collision coverage is optional (usually). It covers damage to your vehicle that is your fault. If you don’t buy it, you’ll have to pay to repair your vehicle if you’re responsible for an accident.
• Comprehensive coverage is also optional (again, usually). It covers damage to the vehicle from many events that are not traffic accidents. Fire, hail, theft, or striking a live animal may all fall under comprehensive coverage.
• Accident benefits is one name for many coverages that help people financially after they’ve been injured in an accident. They’re mandatory almost everywhere.

You may also see specified perils or all perils coverage. Specified perils is like a reduced version of comprehensive coverage. It protects the vehicle from a short list of possible losses. All perils, on the other hand, is the best car insurance you can buy; it combines collision and comprehensive, and includes extra theft coverage.

One note about optional coverages like comprehensive or collision: they are optional if you own your car (though it’s still a good idea to have them). If you lease or finance the car, though, you’ll need to buy both as a condition of your lease or loan.

Buying car insurance

If you live in BC, Saskatchewan, or Manitoba, your province’s public car insurance company (ICBC, SGI, or MPI) will insure your car. You don’t need to contact the insurer directly; you can find a local insurance broker to get your policy. Since there’s only one car insurer in each of these provinces, the policy and price are the same no matter which broker you buy from.

If you live in Quebec, you automatically have coverage for vehicle-related injuries through the public insurance corporation (SAAQ). However, you must buy private car insurance covering your liability and, if you wish, damage to your vehicle.

If you live in any other province or territory, you’ll buy car insurance from a private company. Car insurance is still regulated in these provinces. So, even though you can choose from many insurance companies, they all offer the same basic insurance (with different options for extra coverage and a different price). Like with home insurance, many drivers prefer to shop around for their car insurance in these provinces.

If you live in Ontario, you can buy car insurance online from Square One.

Foreign driving experience

People with a history of safe driving receive large discounts on their car insurance in Canada. Unfortunately for new immigrants, it can be difficult to get foreign driving experience recognized.

Basically, it’s up to each insurance company whether they want to recognize foreign driving experience — and many do not. Others only recognize experience from North America.

In any case, you will need an official driving record or insurance history (translated into English or French if necessary), issued by the licensing authority in the relevant country. With this, you may find an insurance company willing to offer at least a partial safe driving discount.

If you’re staying in Canada, you will have to exchange your foreign driver’s license for one from your home province or territory. Depending on which country issued your license, you may be able to exchange it directly for a full Canadian license. If not, you will have to complete licensing tests and spend some time driving with a restricted license.

One last important note about driver’s licenses:

Beware of those who advertise “international driver’s licenses” for a fee. Most government agencies or insurance companies in North America don’t consider these valid. An officially-recognized International Driving Permit (IDP) may be useful for a short-term visitor to Canada, but is not required for those staying less than 3–6 months (depending on the province). An IDP provides little value to most new immigrants or permanent residents; it won’t help get a Canadian license faster nor will it help with insurance. The IDP does work as a license translation for those with licenses in languages other than English or French, however.

Health insurance

Canada has government-funded healthcare that covers most medical concerns. However, it does not cover vision care, dental care, prescription medications, or ambulances. Health care is run mostly by provincial and territorial governments, so it varies a little by location.

Many Canadians receive private health insurance benefits from their employer, too. Such plans fill in gaps in the public health care, paying for dentist visits, prescription medicines, or eye care.

People newly arriving in Canada will need to buy private health insurance to cover the time before they qualify for public health insurance (more on that below).

Certain groups, such as refugee claimants, qualify for temporary health care under the Interim Federal Health Program.

Getting public health insurance

To qualify for public health care in Canada, you have to register for a health card with your provincial health authority.

Public health insurance in Canada is available to all citizens and permanent residents. Some provinces allow temporary workers or students to enrol in public health insurance as well, but not every province.

To get a health card, most provinces and territories require that you’ve lived in Canada for at least three months. A couple of provinces (Newfoundland and Labrador, and Ontario) don’t require a waiting period. It’s best to apply as soon as you arrive, as it can take weeks to process the application.

For more information about getting health insurance in your home province or territory, visit the appropriate link below:

• Alberta
• British Columbia
• Manitoba
• New Brunswick
• Newfoundland and Labrador
• Northwest Territories
• Nova Scotia
• Nunavut
• Ontario
• Prince Edward Island
• Quebec
• Saskatchewan
• Yukon

Private health insurance for new arrivals or super visa holders

Before you get your public health card, you’ll need to maintain health insurance through a private insurance company. This is usually a requirement for new arrivals to even enter Canada. Super visa holders also need to have private health insurance for their entire stay in Canada.

Without health insurance in place, an emergency trip to the hospital can cost thousands of dollars.

For new arrivals, travel medical coverage from your previous country will work, as long as it’s valid for the time before you get your Canadian health card.

Super visa holders must have health insurance from a Canadian insurer, or an approved insurer outside Canada. The insurance must be valid for at least one year from the visitor’s date of entry to Canada. It has to cover health care, hospitalization, and repatriation, with a minimum $100,000 of emergency coverage.

If you need to buy private health insurance from Canada, many Canadian insurance companies offer travel health insurance for visitors. You can search online for travel health insurance for visitors to Canada, or try an insurance comparison site.

Many of these plans work for both new residents and for super visa holders. If you’re unsure, check with the insurance provider.

Buying additional health insurance

After you’ve got a public health card, you may want coverage for dental care, vision care, or prescription medicine. To cover these or other things not part of the public insurance system, there are two options:

1. Health insurance from your employer

About 67% of full-time jobs in Canada offer extra medical or dental insurance. This is how most Canadians get additional health insurance beyond the public system.

Most job listings say whether they provide health benefits. If you’re interviewing for a job, ask what sorts of health or dental insurance you’ll get if hired. Most plans cover the employee’s family members, too.

If you aren’t fortunate enough to receive expanded health insurance from your job, there is another option:

2. Buying private health or dental insurance

You can buy a supplemental health insurance plan from many insurance companies in Canada. There are usually several levels available.

The cost of private insurance depends on many factors, such as how many family members you have and their ages. However, most people can expect to pay at least $100/month for a basic plan, and $500/month or more for a high-end insurance plan.

To purchase extra health and dental insurance, you must already be covered by public health insurance.

Depending on your family’s income, you can also apply for basic dental coverage through the Canada Dental Benefit. Low-income families can often get some additional health coverage through their provincial government.

Life insurance

Life insurance is different from the other types of insurance we’ve talked about here. Most people won’t deal with life insurance from day-to-day.

Life insurance helps someone provide for their loved ones if they die. Basically, if you buy a life insurance policy, it will pay a certain amount of money when you die. People who have kids heading to college, mortgages to pay off, or other large debts in their future can buy life insurance to ease their surviving family’s financial troubles if the worst should happen.

The payout from a life insurance policy is called a death benefit. When you buy life insurance, you’ll name a beneficiary. This is the person (or group) that will receive the death benefit if you die. You can name a spouse, a child, or another family member. You can also have the payout go to your estate, where it would be given out based on your will. You can even have the benefit paid to a charity or other organization.

There are two basic types of life insurance:

1. Permanent life insurance, which offers lifetime coverage. It pays a death benefit no matter when you die (as long as the policy is still active). Permanent life insurance policies have a cash value, and you’ll get some back if you cancel while you’re alive. You can even use a permanent life insurance policy as collateral to take out a loan.
2. Term life insurance, which offers coverage either for a given number of years, or until you reach a certain age. If you die within the term, the policy will pay the death benefit. If you are still alive when the term ends, the policy is over, and no one gets any payment. Term life insurance policies don’t have any cash value. They’re generally more affordable, though.

Life insurance policies get more expensive as you get older. If you think you’ll have a family to provide for or major debts to settle in the distant future, you might consider looking into life insurance while you’re young. Whether you should buy life insurance is a complicated topic, however.

Commonly asked questions

Is it illegal not to have home insurance in Canada?

Home insurance is not required by law in Canada.

However, landlords may require that their tenants have insurance. Also, mortgage lenders always require home insurance before they release mortgage funds during the home buying process. Of course, home insurance is highly recommended even if you’re not legally required to buy it.

What is the average cost of home insurance in Canada?

Homeowners insurance in Canada costs, on average, around $1,000/year. There are many factors that affect the price, so that can vary greatly — it can even be as low as $40/month. Tenant insurance is cheaper, with policies available starting at around $12/month.

How long does it take to get home insurance in Canada?

If you buy home insurance online, you can get your insurance policy in as little as 5 minutes (especially if you’re buying renter’s insurance). However, sometimes the insurance provider needs additional information after reviewing your application. It can take a few business days before everything is final.

Is car insurance in Canada monthly or yearly?

Most car insurance policies in Canada last for a term of one year. But, many insurance providers offer an option to split the cost into monthly payments.

How much does car insurance cost per month in Canada?

Car insurance costs in Canada vary based on province. Average costs in each province range from $717/year in Quebec to $1,832/year in BC. These are averages, however — based on coverage selections, claims-free discounts, and other factors, the price can vary by hundreds of dollars.

What happens if you don’t have car insurance in Canada?

If you’re caught driving without insurance, penalties include fines (typically at least $500 and up to $25,000), vehicle impoundment, and driver’s license suspension. Additionally, you’ll have a harder time buying car insurance, as you’ll be considered a high-risk driver.

Want to learn more? Visit our Home Insurance Basics resource centre for dozens of helpful articles to guide you through the ins and outs of home insurance. Or, get an online quote in under 5 minutes and find out how affordable personalized home insurance can be.