Short answer
Ontario law does not generally force every homeowner to buy home insurance, but a mortgage lender will normally require acceptable property insurance as a condition of funding. The distinction matters: this is usually a mortgage-contract and lender-risk requirement, not an FSRA rule telling every lender what policy to accept.
The client problem hiding behind the question
The purchase is ready to close, but the insurer will not bind coverage because of an older roof, wiring, heating system, previous claim, vacancy or unusual property use. The client has a mortgage approval yet cannot satisfy one of the lender’s final funding conditions.
What the verified guidance says
FCAC explains that a home-insurance policy protects the home and belongings and that a mortgage lender is commonly named through a loss-payee clause. That protects the lender’s financial interest if insured damage affects its security. The insurer decides whether it will insure the risk and on what terms; the mortgage lender separately decides whether that evidence of coverage is acceptable.
What this does not guarantee
A pre-approval does not confirm that a specific property is insurable. A realtor’s statement that similar homes are insured is not a binder. One insurer’s refusal also does not prove that every insurer will refuse, but the reason for refusal may still make the property unacceptable to the lender.
A practical Ontario example
Illustration only: A buyer removes conditions on a rural home and then learns that the wood-burning system lacks the documentation requested by the insurer. Even with strong income, credit and down payment, the mortgage may not fund until suitable coverage is bound or the lender accepts a documented remedy.
What to do before removing conditions or closing
Ask for an insurance quote before waiving the financing condition, especially for older, rural, vacant, renovated or tenanted homes. Give the insurer accurate details, obtain the binder and lender loss-payee wording, and send it to the lawyer and broker early. If an issue arises, compare corrective work, a specialist insurer, a different lender/property policy fit or a negotiated extension—without hiding the risk.
Questions worth asking
- Is coverage quoted, conditionally approved or actually bound for the correct address and occupancy?
- What is excluded, capped or subject to a special deductible?
- Does the policy name the mortgage lender exactly as the lawyer requires?
- Have renovations, rental use, vacancy, claims and unusual property features been disclosed accurately?
- Could the property issue also affect the appraisal, lender underwriting, mortgage insurer or closing date?
Rajiv’s broker perspective
Insurance approval and mortgage approval are connected at closing, but they are not the same decision. FSRA regulates Ontario insurance conduct; it does not create every lender’s mortgage or property-acceptance policy. The insurer decides what risk it will cover, the lawyer confirms title and closing requirements, and the lender decides whether the property and evidence of insurance satisfy its funding conditions. I would bring those parties together early, identify the exact obstacle and compare the practical route—not promise that a different lender will ignore a genuine property risk.
Related: Real Estate Centre · Mortgage Knowledge Centre · Updates & Rules Centre
Could insurance or title hold up your closing?
Send Rajiv the property type, closing date, intended occupancy, lender request and the concern you have discovered. He can help separate the insurance, legal and mortgage questions, coordinate the information a lender needs and identify the next practical step before the deadline.
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