Renting Out Your Ontario Home on an Owner-Occupied Policy: Where Coverage Can Break, and What Landlord Insurance Adds

A whole-house lease, a basement unit, a boarder down the hall and a furnished sublet while you travel are four different insurance conversations. Here is where the Insurance Act’s statutory conditions land in each one, and what to ask before the keys change hands.

I’m Arthur Zhao, a real estate broker in Toronto. When an owner turns part or all of a home into a rental, the paperwork usually gets careful attention: the lease, the deposit, the rent schedule, the key handover. The document that tends to get left out is the home insurance policy, which was written for a family living in the house, not for a family upstairs and a tenant downstairs, or a tenant and no family at all.

The trouble is that “renting out my home” covers very different arrangements, and the Ontario rules do not treat them as one question. So instead of a single answer, this piece walks through four common setups, what the Insurance Act’s statutory conditions say about each, and what to ask your insurer before the change happens.

What the statute actually reaches

Section 148(1) of the Insurance Act deems a set of Statutory Conditions to be part of every contract in force in Ontario, and says no variation or omission of them is binding on the insured. Those conditions sit inside the Part of the Act that, under s.143(1), applies to insurance against loss or damage to property arising from the peril of fire. The same subsection excludes, among other things, insurance where the subject-matter is rents, charges or loss of profits, and coverage where fire is only an incidental peril.

In practice that means the statutory conditions below speak to the fire coverage on your home. Your liability coverage, any lost-rent coverage and other parts of the policy are governed by the wording of the policy itself, which is why every section that follows ends with questions rather than promises.

Setup one: you rent the whole house and live somewhere else

This is the cleanest break from an owner-occupied policy, because nobody covered by the original arrangement is living there any more. A relocation for work, a move into a partner’s condo, a year caring for a parent in another city: in each case a tenant holds the keys and you do not.

Statutory Condition 4 asks whether a change is material to the risk and within your control and knowledge. A lease you sign yourself is hard to describe as outside your control or knowledge; whether the change is material is a question of fact the statute leaves open. The Insurance Bureau of Canada is direct on this setup: “Be aware that if you own a rental property you don’t live in, you need a separate insurance policy” (IBC, 2025).

Questions worth putting to your broker in writing:

• Does my current policy continue at all once I move out, or does it need to be replaced with a rented dwelling policy?
• Are the furniture and belongings I leave behind still covered, and on what terms?
• Is there liability coverage for an injury to my tenant or their guest on the property?
• Does the new policy include loss of rental income, and what triggers it?

Setup two: a basement apartment while you live upstairs

Here you still live in the house, which is exactly why owners assume nothing has changed. But a separate household now cooks, heats and runs appliances below you, often behind its own entrance. That is a different occupancy from the one your policy described.

Statutory Condition 4 does not wipe out the whole policy by default. Its consequence is that the contract is avoided “as to the part affected thereby” unless the change is promptly notified in writing. Which part is affected by a basement tenancy, and whether it is material, depends on the facts and the policy; the statute gives no list. What it does give is the fix: written notice to the insurer or its local agent. Once notified, the insurer may refund the unearned premium and cancel, or tell you in writing that to keep the contract in force you must pay an additional premium within fifteen days of receiving that notice.

Questions to ask:

• Do you need to know whether the basement unit is self-contained, and does that change how the house is rated?
• If a fire in the basement unit forces my tenant out, is my lost rent covered?
• Does my liability coverage extend to claims by the tenant or their visitors?
• The statute names the insurer or its local agent. Will a written notice sent to you reach the insurer for this purpose, or should I also write to the insurer directly?

Setup three: a room, or a boarder, in the home you still live in

A boarder shares your kitchen and your front door. It feels like a houseguest who pays, and that is the trap. According to the Insurance Bureau of Canada (2025), “Your home insurance policy only covers property, contents and personal liability for you, your spouse, and your dependants. It does not include your tenant’s contents or personal liability.”

The statutory conditions point the same way for the fire coverage. Statutory Condition 2 says that, unless the contract specifically states otherwise, the insurer is not liable for loss or damage to property owned by anyone other than the insured, unless the insured’s interest in it is stated in the contract. Your boarder’s laptop and clothes are not yours, so they are generally outside your policy unless it says otherwise. IBC’s suggestion is to require tenants to carry their own insurance for possessions and liability.

Questions to ask:

• Does taking in one paying occupant change my premium or my eligibility for this policy?
• If my boarder accidentally starts a fire, how does my policy respond to the damage to my house?
• Is there any coverage for my liability toward the boarder, or theirs toward others?

Setup four: a furnished sublet while you are away for a few months

Owners heading abroad for a sabbatical, a long family visit or a work posting sometimes rent the house furnished for a season. Because it is temporary, it rarely gets reported. Statutory Condition 4 contains no minimum duration: the test is whether the change is material to the risk, and the notice has to be prompt, not at the end of the stay.

Two other conditions matter here. If a loss happens while you are away, Statutory Condition 6(1)(b)(vi) requires your proof of loss to show any changes in title, use, occupation, location, possession or exposures of the property since the contract was issued. The rental will surface at claim time either way. And if your insurer decides to end the policy, Statutory Condition 5 requires 15 days’ notice by registered mail, or five days’ written notice delivered personally, by prepaid courier with a delivery record, or electronically if you consented. A registered letter sitting at a post office while you are overseas still starts the 15-day clock the day after it arrives there, so make sure someone is watching your mail.

Questions to ask:

• Does my policy have any condition about the home being unoccupied or vacant, and does a short-term tenant count as occupancy?
• Are my furnishings covered when someone else is using them?
• Who should the insurer contact while I am out of the country?

One more moment that catches owners: shopping for a new policy mid-tenancy

If the house is already rented when you apply for coverage with a new insurer, the issue is no longer a change after the fact; it is what you say on the application. Statutory Condition 1 provides that if an applicant falsely describes the property to the insurer’s prejudice, or misrepresents or fraudulently omits a circumstance material to judging the risk, the contract is void as to any property to which that misrepresentation or omission is material. Describe the tenancy as it is on the day you apply.

Before a tenant moves in: what to do, sorted by the person you deal with

Group these by the person you need to talk to, not by date. Most owners only ever think about the first group.