Home insurance a first-time BC buyer shouldn't skip

If you've ever wondered why your mortgage broker, your realtor and your lawyer all use the word "insurance" and seem to mean three completely different things, you're not missing something. They do mean three different things, and only one of them is built to protect you.

Buying your first place in Metro Vancouver is already a lot: the deposit, the inspection, subject removal, the lawyer's trust account. Insurance usually gets handled in the last week before completion, in a rush, by whoever calls first. That's how people end up with the wrong coverage at the wrong limit. Let's slow it down.

Three products, one word

Mortgage loan insurance is the one your lender asks about first. CMHC is blunt about who it's for. It "protects your lender in case you can't make your payments" (CMHC). You pay the premium. Your lender collects the benefit. If you die, or your roof fails, it does nothing for your family.

You need it when your down payment is under 20%. The minimums, per CMHC, are 5% on a purchase of $500,000 or less, and 5% on the first $500,000 plus 10% on the portion above that. It isn't available at all once the purchase price reaches $1.5 million, which is a real ceiling in parts of Vancouver and Burnaby. Premiums run from 0.60% of the loan at a loan-to-value ratio up to 65%, to 4.00% at 95%, and 4.50% where the down payment comes from a non-traditional source (CMHC). One small mercy for BC buyers: CMHC notes those premiums are subject to provincial sales tax in Quebec, Ontario and Saskatchewan, so that extra tax doesn't apply here.

Home insurance is the property policy. It covers the building, your belongings, your liability as an owner and your living costs if the place becomes unlivable. Your lender wants proof of it before funds are released, which is exactly why it starts to feel like a formality. It isn't one.

Life and critical illness coverage protects the people who have to keep making the payment. Nothing in a mortgage approval checks whether your household could carry that debt if one income stopped.

What a BC home insurance policy covers, and what it leaves out

Some of the risks people here worry about most are the ones a standard policy handles least. The Province of British Columbia puts it plainly: "Insurance for fire, including wildfire, is a standard component in home insurance policies in B.C.," but "coverage for earthquakes, flooding and overland water damage is usually optional, so be sure to speak with your insurance representative" (PreparedBC).

The Insurance Bureau of Canada lists earthquakes and other earth movement among perils that are generally excluded, and notes that coverage for earthquake damage "may be purchased as additional coverage" (IBC).

That matters here more than almost anywhere else in the country. Natural Resources Canada's Geological Survey reports roughly 400 earthquakes a year in the region running from the north end of Vancouver Island down to Seattle, about a dozen of which are felt, with earthquakes "capable of causing structural damage" happening "every decade or so." The megathrust events on the Cascadia Subduction Zone can reach magnitude 9, occur every 200 to 800 years, and the last one struck on January 26, 1700 (Natural Resources Canada).

Water is the more routine problem. IBC reported that insured damage from severe weather in Canada topped $2.4 billion in 2025, the tenth costliest year on record, with December floods in British Columbia among the year's notable events. The longer trend is the part worth sitting with: insured losses from catastrophic weather and wildfire totalled $14 billion across 2006 to 2015, and $37 billion across 2016 to 2025, adjusted for inflation (IBC).

So before you sign, get answers to these in writing:

• Is overland water, meaning flooding from outside the home, included or an add-on, and is my address even eligible?
• Is sewer backup included, and at what limit?
• Do I have earthquake coverage, and what is the deductible as a percentage of insured value?
• Is my dwelling limit based on rebuild cost today, not the price I paid?
• Does the policy include extended or guaranteed replacement cost if rebuilding runs past that limit?

Push on that last one. Construction costs in the Lower Mainland have not been kind to old dwelling limits.

Buying a condo? Read the strata's policy before you read your own

This catches new owners in Burnaby, New Westminster and Coquitlam constantly. The strata corporation's policy covers the building. It does not cover, in the Province's words, "personal liability, household contents, expenses for owners or tenants to live elsewhere after a loss, or paying the strata corporation's insurance deductible" (Province of BC).

That deductible is the trap. The Province states that strata insurance deductibles "can range from $100,000 to $750,000 or higher," and that a strata owner "can be deemed responsible, and required to pay the strata corporation's insurance deductible, even if not 'at fault' or negligent." A failed dishwasher hose that soaks the two units below you can land on your account without anyone calling you careless.

Your own unit owner policy can include coverage for that deductible exposure, along with your contents, your improvements and your liability. Ask for the strata's current insurance summary during your subject period, find the actual deductible figure, and set your coverage against that number instead of a default.

The part first-time buyers skip

A mortgage is a promise your household makes for the next 20 or 25 years. Property insurance protects the asset. It does nothing when the income stops.

Lenders commonly offer mortgage protection coverage at the branch, and it's genuinely convenient. Before you tick the box, ask:

• Who owns the policy, and who receives the money, you or the lender?
• Does the benefit shrink as the mortgage balance drops while the premium stays put?
• Was my health reviewed when I applied, or will it be reviewed when a claim is made?
• Can I keep this coverage if I switch lenders at renewal?

Individually owned term life and critical illness coverage answer those questions differently. You name the beneficiary, the amount stays where you set it, and the policy follows you rather than the loan. Neither approach is automatically right for everyone. What fits depends on your health, your budget, your family, and whatever group coverage you already have through work.

One more thing worth raising while you're planning: if you're still saving toward the purchase, the RRSP Home Buyers' Plan and the First Home Savings Account both have limits and repayment rules that change over time, so check the CRA's current pages rather than a figure a friend half remembers.

What this doesn't tell you

The honest limits on everything above:

• No prices here. Premiums depend on the building, its claims history, location, deductible and insurer, and anyone quoting you a number from an article is guessing.
• Whether earthquake coverage earns its cost is a real judgment call. The hazard is well documented, the deductible is usually a percentage of insured value and can be large, and sensible people looking at the same facts decide differently.
• The Natural Resources Canada figures come from a Geological Survey of Canada fact sheet. Seismic hazard estimates get revised as the science develops.
• IBC's loss figures are national and cover insured losses only. Uninsured damage isn't in them, and a national total says nothing about your specific street.
• The $100,000 to $750,000 strata deductible range is a provincial range. Only your building's current policy tells you your number.
• Wordings differ between insurers. "Flood," "water damage" and "replacement cost" are not standardized terms in casual conversation, so read the definitions.

This article summarises published rules and research for general information, is current as of the date shown, and is not personalized financial, tax or legal advice.

Sources

• Canada Mortgage and Housing Corporation, "What is Mortgage Loan Insurance?" (link)
• Canada Mortgage and Housing Corporation, "CMHC Mortgage Loan Insurance Cost" (link)
• Province of British Columbia, PreparedBC, "Insurance and emergency preparedness" (link)
• Province of British Columbia, "Strata owner and tenant insurance" (link)
• Insurance Bureau of Canada, "Earthquake Insurance," optional coverage (link)
• Insurance Bureau of Canada, "Severe weather-related insured losses in Canada exceed $2.4 billion in 2025," January 2026 (link)
• Natural Resources Canada, Geological Survey of Canada, GEOFACT, "Earthquakes in southwestern British Columbia," 2011 (link)

If you're a few weeks from completion and not entirely sure what you're covered for, that's normal, and it's fixable in one conversation. Milo Sarmiento is an independent broker in Burnaby who compares Canada's top insurers, works in English and Tagalog, and will walk through your policy line by line with you. Book a free no-pressure call and bring your questions.