Do I need to take out insurance on the property when purchasing it?

Home insurance is not required by law in Alberta and Calgary, but it is virtually necessary to obtain a mortgage. Most banks and lenders require insurance before approving a mortgage, making it virtually mandatory for the vast majority of homebuyers.

Legal requirements and obligations

Legal regulations

In Canada and the province of Alberta, home insurance is not legally required. Unlike car insurance, the government does not require property owners to have a home insurance policy. However, this does not mean that you can easily do without it.

Mortgage lender requirements

Virtually all banks and financial institutions require proof of home insurance before approving a mortgage loan. Lenders impose this requirement to protect their investment.

If you do not maintain insurance during the term of your mortgage, there can be serious consequences:

  • The lender may purchase its own insurance policy at your expense (usually much more expensive)
  • Possible breach of the mortgage agreement
  • Potential legal problems

Types of home insurance in Calgary

Main types of coverage

1. Comprehensive insurance

The most extensive coverage, protecting against all risks except those specifically excluded from the policy. This is the most expensive but most comprehensive type of insurance.

2. Broad insurance

Provides all-risk coverage for the building and coverage for named risks for the contents. This type is often referred to as “standard.”

3. Basic insurance (Named Perils)

Covers only those risks that are specifically named in the policy. The cheapest option with minimal coverage.

4. No-frills insurance

The most limited coverage, usually only against fire. Intended for older or damaged homes.

What does home insurance cover?

A typical home insurance policy in Calgary includes:

  • Home coverage — protection of the structure of the home against fire, theft, vandalism, and other risks
  • Personal property coverage — furniture, clothing, electronics, and other personal belongings
  • Additional structures — garages, sheds, fences, and other detached buildings
  • Personal liability — protection from lawsuits if someone is injured on your property or damages your property
  • Additional living expenses — temporary housing while repairs are being made after a claim

Cost of home insurance in Calgary

Average figures

According to Ratehub.ca, the average cost of home insurance in Calgary in 2024 is $2,374 per year, which is approximately $198 per month. This is 4.5% less than the previous year. According to other sources, the monthly cost can range from $81 to $265.

Factors affecting the cost

  • Location — proximity to fire stations, crime rate in the area, susceptibility to natural disasters

  • Type and age of the house — construction materials, year of construction, condition of the home

  • Credit history — in Alberta, insurance companies may use credit scores to determine rates

  • Insurance history — number and type of previous insurance claims

  • Security systems — alarms, smoke detectors, and security systems can lower the cost

Risks without home insurance

Financial consequences

Without insurance, you are fully financially responsible for:

  • Repairing or replacing your home after a fire, flood, or other disaster
  • Replacing all of your personal property
  • Medical expenses and compensation if someone is injured on your property
  • Temporary housing while repairs are being made

Special risks for Calgary

Calgary is prone to severe weather conditions, including:

  • Hailstorms (the city has experienced significant damage from hail)
  • Floods
  • High winds
  • Wildfires

Three of the ten largest insurance payouts in Canadian history were related to weather disasters in Calgary.

The insurance application process

When to apply

Home insurance should be taken out immediately after your offer to purchase a home is accepted. Lenders will not approve a mortgage without proof of fire insurance.

Required documents

To obtain home insurance, you will typically need:

  • Information about the type and age of the home
  • Details about the heating, electrical, and plumbing systems
  • An estimate of the value of the home and personal property
  • Information about your previous insurance history
  • Credit history (with consent)

Tips for saving

  • Compare offers — get several quotes from different insurance companies

  • Bundle discounts — combining home and car insurance can save you up to 15%

  • Increase your deductible — a higher deductible lowers your monthly payments

  • Security systems — installing an alarm or detectors can result in discounts

  • Annual payment — paying your annual premium in one lump sum often results in additional savings

Additional coverage

Recommended add-ons

  • Flood insurance — especially important in Calgary due to the risk of flooding (not usually included in standard policies)

  • Earthquake insurance — additional coverage to protect against seismic activity

  • Sewer backflow coverage — protection against water damage due to sewer problems

  • Guaranteed replacement value — allows you to rebuild your home even if the cost exceeds the policy limits

Special tips for Ukrainian newcomers

Support resources

Special resources are available for Ukrainian newcomers to Calgary through the Welcome Centre. These organizations can help navigate insurance requirements and find the best options.

Language barriers

Many insurance companies offer services in different languages or can provide interpreters to explain policy terms.

It is important to fully understand the terms and conditions of the insurance before signing.

Building credit history

For newcomers who do not yet have a credit history in Canada, some insurance companies may consider other financial information or require larger deposits.

Conclusion

Although home insurance is not legally required in Calgary, it is effectively necessary to obtain a mortgage and is critical for financial protection.

Given the high risk of weather disasters in the region and the significant financial consequences of potential losses, home insurance is a smart and practically necessary investment in protecting your largest financial asset.

It is recommended that you start looking for insurance immediately after accepting an offer to purchase a home, compare several offers from different companies and choose the coverage that best suits your needs and budget.