Insurance Strategies for Real Estate Investors in Canada

If you own investment properties, you need to think about insurance differently than regular homeowners. The wrong coverage can leave you exposed to massive risks. The right approach can protect your wealth and even help you grow your portfolio.

Let’s walk through what actually matters when it comes to insurance for real estate investors.

Why Most Insurance Companies Can’t Handle Growing Portfolios

Here’s a problem many investors run into: you start building your portfolio, and everything’s going great. You’ve got three, four, maybe five properties insured with the same company. You’re getting nice bundling discounts. Then you try to add property number six, and suddenly your insurance company says they can’t help you anymore.

You’ve hit their limit.

Now you’re stuck. Do you move everything to a new company and lose all your accumulated discounts? Or do you split your portfolio across multiple providers and deal with the headache of managing different policies with different teams?

The better answer is to work with a provider that has no limit on the number of properties you can insure. When your insurance company can grow with you, you get to keep all your bundling benefits while dealing with just one team who knows your entire situation.

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Liability Coverage: Your Safety Net

Here’s what keeps many landlords up at night: what if someone gets hurt on your property and sues you? A slip and fall, a deck collapse, any accident could potentially wipe out everything you’ve worked to build.

Standard Coverage Isn’t Enough

Most property insurance comes with about $2 million in liability coverage per property. That sounds like a lot, but one serious accident can blow through that pretty quickly when lawyers get involved.

The Umbrella Policy Most Investors Don’t Know About

There’s an additional coverage option called an umbrella policy that adds another $5 million in protection on top of your standard coverage. That means you could have up to $7 million in liability protection per property incident.

Think about that for a second. If you’ve spent years building a portfolio worth millions, doesn’t it make sense to protect it with proper coverage? The umbrella policy costs way less than you’d think, especially compared to what you’d lose if you had to liquidate properties to pay a judgment.

Life Insurance vs Mortgage Insurance: Why You’re Probably Doing It Wrong

When you get a mortgage, your lender will ask if you want mortgage insurance (also called creditor protection). Many investors skip it or say they’ll deal with it later. That’s mistake number one.

But here’s mistake number two: actually buying the mortgage insurance the lender offers.

The Problem With Creditor Protection

Let’s say you get mortgage insurance on a $400,000 mortgage. You’re paying maybe $100 per month for coverage. Sounds reasonable, right?

Here’s the catch: as you pay down your mortgage, the coverage decreases, but your premium stays the same. Five years later, you owe $250,000, but you’re still paying that same $100 monthly premium for less and less coverage.

Even worse, if something happens to you, the money goes straight to the bank to pay off the mortgage. Your family doesn’t see a dime.

The Smart Alternative

Get a regular life insurance policy instead. Here’s why this makes so much more sense:

You pay the same premium, but the coverage never decreases
The money goes to your family or estate, not the bank
Your family can choose what to do with the money
They could even use it as a Down Payment on another property to keep your investment strategy going

If you pay $100 per month for $400,000 in life insurance, you get the full $400,000 payout whether you’ve paid off half the mortgage or just started. Your family gets the money and decides how to use it. That’s way more flexibility and way better value.

Commercial Property Insurance: What You Need to Know

Once you move beyond residential properties, insurance gets more complicated. The good news is that many commercial properties are actually pretty straightforward to insure.

What’s Easy to Insure

Most standard commercial buildings are no problem. Office buildings, retail spaces, warehouses, and contractor operations typically get approved quickly. Some specialized businesses like tool and die shops are considered low-risk and can be approved almost immediately.

Watch Out for Renewal Price Games

Here’s a dirty trick some commercial insurance companies play: they offer you a crazy-good price for the first year to get your business. You switch over, happy with the savings. Then renewal time comes, and suddenly your premium jumps 40% or more.

You’re stuck. Switching again means starting over, and by now you’ve invested time in the relationship. Plus, who’s to say the next company won’t do the same thing?

Ask upfront about renewal pricing. A company that prices fairly from the start might not be the absolute cheapest year one, but you’ll have stable, predictable costs year after year. That’s worth way more than a temporary discount.

The Existing Client Advantage

Once you have properties insured with a good company, adding more becomes much easier. They already know you, they’ve seen how you manage properties, and they don’t need to do extensive due diligence every time. This makes expanding your portfolio faster and simpler.

Consolidating Everything: The Hidden Benefits

Having your home insurance, auto insurance, life insurance, and commercial property insurance all with one company and one team creates advantages you might not expect:

Better discounts as you add more policies
One person who understands your complete financial picture
Faster service because all your information is in one place
No confusion about which company handles which property
One phone call handles everything

The old advice about diversifying your insurance across multiple companies doesn’t really make sense anymore. You’re not reducing risk – you’re just making your life more complicated.

Investment Management: Why Bank Advisers Don’t Cut It

Quick question: if you have investments at a bank, what’s your adviser’s name?

If you can’t answer immediately, that’s a problem. Banks rotate advisers constantly. You might work with someone for a year, then get reassigned to someone new. Nobody develops a real understanding of your situation or your goals.

Real financial planning requires a relationship. You need someone who understands where you’re trying to go, knows your complete financial picture, and sticks with you for the long term. That person should know about your properties, your insurance, your investments, and how everything fits together.

Taking Action (Finally)

Most investors know they should review their insurance and protection strategies. They plan to do it. They just never get around to it.

Then something happens, and they wish they’d acted sooner.

If you’re building a property portfolio, here’s what you should do right now:

Check if your current insurance company can handle your growth plans
Look at your liability coverage and consider an umbrella policy
If you have mortgage insurance, compare it to a regular life insurance policy
Review your commercial property coverage if you have any
Find one person who can help you coordinate everything

The best time to fix your insurance was yesterday. The second best time is today. Don’t wait until you need the coverage to find out what you’re actually protected against.

Book Your Strategy Call

Frequently Asked Questions

How many rental properties can I insure with one insurance company?

This depends on the insurance provider. Many companies have limits on how many properties they'll insure for one client. However, some providers have no limit, allowing you to insure your entire portfolio with one team while maintaining all your bundling discounts.

What's an umbrella liability policy and do I need one?

An umbrella policy provides additional liability coverage beyond your standard property insurance. It typically adds $5 million on top of your standard $2 million coverage. If you have multiple properties or significant assets to protect, an umbrella policy is a smart safeguard against catastrophic claims.

Should I get mortgage insurance or life insurance for my rental properties?

Life insurance is usually the better choice. Unlike mortgage insurance, which decreases as you pay down your mortgage while premiums stay the same, life insurance maintains its full payout amount. Plus, the money goes to your family who can decide how to use it, rather than going directly to the lender.

Why does my insurance premium increase so much at renewal?

Some insurance companies offer very low initial rates to win your business, then significantly increase premiums at renewal time. This is especially common with commercial properties. Always ask about renewal pricing practices upfront, and consider working with providers who offer sustainable long-term pricing.

Is it better to have all my insurance with one company or spread it around?

Consolidating with one provider typically offers more advantages. You get better bundling discounts, one team knows your complete situation, service is faster, and managing everything is simpler. The old advice about diversifying insurance providers doesn't reduce risk the way it once did.

What commercial properties are hardest to insure?

Properties with swimming pools or aquatic facilities are often difficult to insure due to high liability risks. Most other commercial properties like office buildings, retail spaces, and contractor operations are relatively straightforward. Properties with higher risks may require more due diligence and documentation.

How does adding properties to existing insurance work?

If you already have properties insured with a company, adding more is typically much easier than starting from scratch. The insurance provider already knows you and how you manage properties, so they don't need to do extensive due diligence each time. This makes portfolio growth faster and simpler.

Can I use life insurance proceeds to buy another investment property?

Yes. Unlike mortgage insurance which goes directly to the lender, life insurance proceeds go to your designated beneficiary. Your family can choose to keep existing mortgages in place and use the insurance money as a down payment on another property, [continuing your investment strategy](/blog/why-you-need-real-estate-investors-on-your-mortgage-team).

Disclaimer: LendCity Mortgages is a licensed mortgage brokerage, and our team includes experienced real estate investors. While we are qualified to provide mortgage-related guidance, the broader financial, tax, and legal information in this article is provided for educational purposes only and does not constitute financial planning, tax, or legal advice. For matters outside mortgage financing, we recommend consulting a Chartered Professional Accountant (CPA), licensed financial planner, or qualified legal advisor.

Written by

LendCity

Published

December 22, 2025