Insurance basics: what you need and what you don’t

🟡 Intermediate · Step 11 of 22 · Topic: Taxes, Insurance & Safety

In one sentence

Insurance protects you from big costs you could not pay alone, and this post explains the main types in Canada and which extras you can often skip.

Words to know

Premium: what you pay for insurance, usually every month or every year.
Deductible: the part of a claim you pay yourself before the insurance pays the rest.
Claim: your request to the insurance company to pay for a loss.
Liability: your legal responsibility if you hurt someone or damage their property by accident.
Group benefits: insurance you get through your job, such as health, dental, life or disability coverage.

Step 1: Tenant insurance if you rent

Your landlord’s insurance covers the building. It usually does not cover your things. Tenant insurance (also called renter’s insurance) often covers three things:

Your belongings: furniture, clothes, a laptop, if they are stolen or damaged by fire or water.
Liability: if you accidentally damage the building or hurt a visitor.
Extra living costs: a hotel or meals if you must move out for a while after a fire or flood.

Some landlords ask for tenant insurance in the lease. Read the policy to see what is covered and what the deductible is.

Step 2: Car insurance is required

If you own or drive a car, you must have car insurance. Each province runs its own system.

British Columbia: ICBC, a public insurer, sells Basic Autoplan. ICBC says it is the mandatory coverage for any vehicle in B.C. It includes $200,000 of third-party liability. You can buy more coverage on top.
Many other provinces: you buy car insurance from private companies. Prices can differ a lot, so many people compare several quotes.

Prices depend on the car, where you live and your driving record. If you drove in another country, ask insurers if they will count that driving record. Get a quote before you buy a car. Step 12 of this guide explains why.

Step 3: Health coverage from your province

Each province and territory has its own public health plan. It pays for medically needed doctor and hospital care. Apply as soon as you can, for example when you move to Canada or to a new province.

Some provinces make new residents wait before coverage starts. This can apply if you move from another country, and sometimes from another province:

British Columbia: the rest of the month you become a resident, plus two more months.
Quebec: RAMQ says coverage usually starts after a maximum of 3 months.

Check your own province’s rules. During a waiting period, you can buy private health insurance. B.C. advises arranging it before you arrive. It also warns that most private plans do not cover pre-existing conditions, including pregnancy.

Public plans do not pay for everything. Coverage for prescription drugs, dental care and eye care is often limited, and it differs by province. Many people fill this gap with group benefits from work or a private health plan.

Step 4: Life and disability insurance

Life insurance pays money to your family if you die. It matters most if someone depends on your income. FCAC describes two main types:

Term life: covers you for a set number of years. It has no cash value. Premiums usually start low but may rise when you renew.
Permanent life (such as whole life): covers you for your whole life and often builds a cash value. It costs much more for the same amount of coverage.

Disability insurance replaces part of your income if illness or injury stops you from working. FCAC says most long-term plans replace about 60% to 70% of your normal income.

Before you buy either one, check your group benefits at work. You may already have some coverage. Group coverage usually ends when you leave the job, so check again when you change jobs.

Step 5: Extras many people can skip

Extended warranties on phones, TVs and small appliances. Check first what the maker’s warranty and your credit card already cover.
Credit card balance insurance. FCAC says it is optional and expensive. Its example premium is $0.95 for every $100 you owe, each month, plus tax.
Coverage you already have through work, your credit card or another policy.
Large life insurance when nobody depends on your income.

Insurance is a personal choice. The right mix depends on your family, your job and what you own.

Example

You rent an apartment. Your tenant insurance has a $500 deductible.

Your laptop worth $1,200 is stolen. You make a claim.

The insurance pays $1,200 − $500 = $700. You pay the first $500 yourself.

A higher deductible usually means a lower premium. For example, if a policy costs $25 a month, that is $25 × 12 = $300 a year. Choose a deductible you could pay from your emergency fund. These prices are only examples.

Common mistakes

Thinking the landlord’s insurance covers your belongings.
Moving to Canada, or to a new province, without private health coverage during a waiting period.
Buying a car before getting an insurance quote.
Paying twice for coverage you already have at work or through a credit card.

✅ My checklist

☐ I have tenant insurance (or home insurance) and know my deductible
☐ I applied for my provincial health card and know when coverage starts
☐ I checked what my group benefits at work include
☐ I know if anyone depends on my income and needs life insurance
☐ I said no to extras I don’t need

Next step → Step 12: Buying your first car without overpaying

More in this topic → Taxes, Insurance & Safety

There are no affiliate or referral links in this post. This is general information, not financial, tax or legal advice; everyone’s situation is different. Figures were checked in October 2026 and can change.

Sources: ICBC: Basic Autoplan insurance · BC Government: MSP coverage wait period · RAMQ: Waiting period · FCAC: Life insurance · FCAC: Disability insurance · FCAC: Credit card balance insurance