What home insurance covers
Home insurance is property insurance. It covers losses from damage to your house and other structures on your land, stolen or damaged belongings, and natural disasters like fire and windstorms. Flood and earthquake coverage usually cost extra.
It can also cover liability or medical costs if someone gets hurt on your property.
Most lenders require you to carry home insurance as a condition of your mortgage.
What makes title insurance different
Title insurance protects your legal ownership of the property—your title. It covers risks from title defects that prevent you from owning the place free and clear. That includes encroachment and zoning problems, unpermitted work by a previous owner, and title fraud.
Here's the key difference: home insurance protects you from events that might happen in the future. Title insurance protects you from existing problems you didn't know about—issues that were already there before you bought the place.
It's a subtle difference, but it matters. One of the most common reasons claims get denied is because homeowners thought they had title insurance when all they had was home insurance.
Lender policies vs. homeowner policies
Title insurance does more than protect you after closing—it can help the closing process go more smoothly. That's one reason many lenders require you to buy a lender title insurance policy (also called a loan policy) as part of your mortgage.
To protect yourself, you also need a homeowner title insurance policy. Knowing the difference between the two can save you from losing out.
Title insurance is a one-time cost
Home insurance is a monthly payment that can go up if you make a claim. Title insurance is a one-time premium based on your property's location and size.
The cost varies by province, but expect somewhere between $150 and $350 based on average 2021 home prices.
How long each policy lasts
Your homeowner title insurance policy lasts as long as you have an interest in the property. It can even pass to your heirs or other beneficiaries if they inherit the title from you.
Your lender title insurance policy lasts as long as your mortgage does. If you refinance with a new lender, you'll likely need a new lender policy. Home insurance isn't affected by refinancing—you just keep paying the monthly premium. Your lender may still ask for proof of coverage, same as with a new mortgage.
You need both
Title insurance and home insurance cover different risks. Having both helps you prepare for what the future may bring.
The risks title insurance covers are expensive and hard to see coming, but protecting yourself is straightforward. If you're refinancing or buying, make sure you know which policies you have—and which ones you still need.
