What Is Homeowners Insurance and What Does It Cover?

Your home is one of your most valuable assets. But it’s also vulnerable to risks that can arise suddenly—like fire, theft, or water damage. That’s why homeowners insurance exists. It protects not just the structure you live in, but also your personal belongings, your finances in the event of liability, and even temporary living costs if you can’t stay in your home after a loss.

This matters when you're securing a mortgage, protecting your family’s long-term financial foundation, or simply trying to understand how your home is safeguarded. You might think about this the next time a storm rolls in, or when reviewing what your policy really includes.

What Homeowners Insurance Typically Covers

A standard homeowners insurance policy in Canada covers four key areas:

The dwelling (structure)
Covers your home’s physical structure—walls, roof, floors, built-in fixtures—against damage from covered causes like fire, wind, or vandalism.
Other structures on your property
Includes detached garages, garden sheds, fences, or other buildings, typically up to a percentage of your home’s insured value.
Personal belongings
Covers furniture, clothing, electronics, and other contents inside your home if they’re damaged or stolen due to a covered event.
Personal liability
Protects you if someone is injured on your property or if you accidentally cause damage to someone else’s property.
Additional living expenses
Pays for hotels, meals, and other living costs if your home becomes uninhabitable after a covered loss.

Coverage Area	What’s Protected	Limitations
Dwelling	House structure, attached fixtures	Doesn’t cover wear and tear or floods
Contents	Furniture, clothing, appliances	Subject to policy limits, exclusions
Liability	Injury or property damage to others	Excludes intentional harm
Living expenses	Hotel stays, meals if displaced	Only during active claims for covered events

Tip: Most policies include limits on certain items like jewelry, art, or collectibles. Ask your insurer about adding extra coverage for high-value possessions.

Common Risks That Are Covered

Standard policies usually protect against a broad list of causes of damage, including:

Fire and smoke
Theft or attempted break-in
Windstorms and hail
Lightning strikes
Vandalism or civil unrest
Water damage from burst pipes or accidental overflow
Falling objects (like trees or debris)

Note: Floods, earthquakes, and sewer backups are often excluded and may require optional endorsements or separate policies.

What’s Not Covered

While homeowners insurance offers broad protection, there are important exclusions:

Damage from neglect, poor maintenance, or normal wear and tear
Mold, rot, or pests like termites or rodents
Damage from earthquakes or overland flooding (unless specifically added)
Business-related property or liability (unless you add home business coverage)

Caution: Don’t wait until you need to file a claim to learn what’s excluded. Review your policy annually to ensure it reflects your current risks and lifestyle.

Protection That Extends Beyond the Building