Insurance for your home: four types that protect different things
Mortgage default, property, title and life or disability insurance are not interchangeable. Each protects a different interest and has its own conditions. Knowing which is which makes your closing checklist much easier to understand.
Mortgage default insurance protects the lender
For eligible purchases with less than 20% down, mortgage default insurance is generally required. Eligibility still depends on price limits, down payment and underwriting rules. CMHC, Sagen and Canada Guaranty are Canadian insurers. The lender arranges coverage as part of approval. The premium is calculated using an applicable premium rate on the insured loan amount—not simply by adding the loan-to-value ratio as a fee. Eligible premiums may be financed.
- It does not pay your mortgage because you become ill or unemployed.
- It does not replace home insurance.
- An insured mortgage is not automatically the best or cheapest option for every borrower.
Property insurance protects the home under its policy
Lenders typically require suitable property insurance before advancing funds, with their interest noted as required. Your insurance broker needs the property details, closing date and lender information. Arrange this early, especially for unusual construction, previous claims, flood exposure or a vacant home. For strata property, ask about unit improvements, liability and strata deductible coverage.
Title insurance addresses certain title-related losses
A lender policy protects the lender’s insured interest; an owner policy protects the owner within its terms. Coverage may include certain fraud or title defects, but exclusions and conditions matter. It does not prevent fraud from occurring or replace legal review, an inspection or property insurance. Ask your lawyer or notary whether it is required and whether owner coverage is appropriate.
Optional life, disability or payment protection
Optional mortgage-related protection may cover specified events, subject to eligibility, exclusions, limits and claims terms. Compare it with personally owned life or disability insurance. Cost, beneficiary, portability, benefit changes and medical underwriting may differ. Do not assume every broker-offered policy is portable or that a policy pays every missed payment.
- Ask what is covered, excluded and subject to a waiting period.
- Understand how long benefits last and who receives them.
- Confirm whether coverage continues if you switch lenders.
- Seek advice from an appropriately licensed insurance professional.
Coordinate the paperwork
Your mortgage commitment and legal professional identify closing insurance requirements. Keep the binder or proof of coverage and confirm the correct effective date. Do not cancel old coverage until your insurance adviser confirms the transition is safe.
Let’s make this personal
Tell Matt what matters most to you, and what feels unclear. We can help you work through the mortgage side of the decision and coordinate the next steps with your other professionals. Email matt.parker@indimortgage.ca or call 778.897.2554.
General Canadian mortgage guidance with British Columbia context; reviewed October 16, 2026. Your lender’s written requirements, mortgage contract and professional legal or tax advice take priority.