Insurance
Share
You pay more than just premiums for home insurance in Ontario. A mandatory 8% sales tax is added on top of your costs. Most people can’t claim it back—but there are exceptions. Certain farm and business properties may qualify for a partial refund.
Looking into home insurance costs in Ontario? The first thing to know is that premiums aren’t the full story. The province charges tax on almost every home insurance policy. Understanding how it works can save confusion—and maybe even some money.
So, is there tax on home insurance in Ontario?
Yes. Home insurance in Ontario includes tax. You pay 8% provincial sales tax on every premium.
If your yearly premium is $1,500, the added tax is $120. The total cost becomes $1,620. Insurance premiums are subject to tax under Ontario’s Retail Sales Tax Act. It applies to almost every home insurance policy.
According to the Ontario Ministry of Finance, this 8% rate has remained unchanged since 2010, making it one of the more stable components of insurance costs in the province. While property values and claims costs have increased significantly over the past decade, the tax rate itself has held steady, though that also means there’s been no relief on this particular expense.
Most home insurance policies in Ontario are taxable. If you’re paying for coverage on a house, the premium will include tax. Some exceptions exist. Few people qualify. Ontario allows an exemption with a valid purchase exemption certificate. Most homeowners will not meet the eligibility criteria.
You can’t claim that tax back. Provincial sales tax on insurance is not refundable. It’s also not deductible on your income tax return, unless your home is used for business.
If you rent out part of your home, or work from a home office, your home insurance counts as a business expense. Canada Revenue Agency allows you to deduct part of the insurance cost. The portion matches the percentage of your home used for work. Example: If 30% of your home is a home office or rental, you may deduct 30% of the premiums.
For landlords with multiple rental properties, this deduction can add up substantially. On a $2,000 annual premium, deducting the full amount saves roughly $400-$600, depending on your marginal tax rate. Keep detailed records showing the square footage dedicated to business use and ensure your home office meets CRA’s criteria; it must be your principal place of business or used regularly and exclusively for earning income.
For landlords with multiple rental properties, this deduction can add up substantially. On a $2,000 annual premium, deducting the full amount saves roughly $400-$600, depending on your marginal tax rate. Keep detailed records showing the square footage dedicated to business use and ensure your home office meets CRA’s criteria; it must be your principal place of business or used regularly and exclusively for earning income.
Most people won’t be able to deduct anything. Unless your home is partly rented or used for business, your tax-paid premium is just a regular cost.
The tax applies whether you pay monthly or yearly. If you pay insurance premiums in instalments, every payment includes the sales tax. The cost remains the same regardless of how often you pay.
However, paying annually instead of monthly can still save you money overall. Many Ontario insurers charge a 3-5% premium for monthly payment plans to cover administrative costs. On that $1,500 annual premium example, choosing monthly payments could add another $45-$75 to your total, on top of the $120 in sales tax.
Group insurance doesn’t change the rules. If you get home insurance as part of a group benefits plan, the same 8% tax applies. You might see it listed separately or included in the total amount. The tax year doesn’t affect the charge. Tax is applied at the time of payment.
Most insurers include the sales tax in the final number. When you get a quote from an insurance company, the price likely includes all fees. Which means you probably won’t see a separate tax line. But the amount is still there. You are paying for it.
When comparing quotes from different insurers, always confirm whether the quoted price is pre-tax or includes the 8% levy. Some brokers quote the base premium, while others provide the all-in cost. A $1,400 quote from one insurer might actally cost more than a $1,500 quote from another once you factor in how they present the numbers.
Home insurance premiums vary. So does the tax. If your coverage costs more, the tax is higher. A bigger home or more risks lead to a higher total. Ontario’s tax is fixed at 8%. The rule applies no matter where in the province you live.
Some people think they can avoid the tax with different types of coverage. That’s not true. No matter what insurance product you choose, if it’s home coverage, the tax applies. Tenant, condo, or homeowners—all are taxed the same way.
Certain types of coverage are exempt, but they don’t include home insurance. Exempt insurance usually means health or life policies. Not home or property.
Life insurance and health insurance premiums are not subject to Ontario’s sales tax, which creates confusion for some buyers. The distinction is that property and casualty insurance (which includes home, auto, and liability coverage) falls under the Retail Sales Tax Act, while personal insurance products do not. This is why your car insurance also carries the same 8% tax.
If your policy starts in the middle of the month, the tax starts with the first payment. Any changes later don’t remove the tax. Even mid-policy adjustments include tax.
If you change your home address, your insurer may adjust the cost. But the tax rate stays the same. It’s always 8%. Location doesn’t affect the rate. The only way to lower taxes is to reduce your premiums.
If you cancel your home insurance, you might get money back. The insurer will return the unused portion of your premiums, minus tax. You won’t get the tax refunded unless the full payment was never processed.
You need to file a tax return with the Canada Revenue Agency to claim any deductible portion of home insurance. Only do this if you qualify under work-use or rental rules. A completed form and receipts are required.
The specific CRA forms you’ll need depend on your situation. Self-employed individuals working from home use Form T2125 (Statement of Business or Professional Activities), while those earning rental income use Form T776 (Statement of Real Estate Rentals). Include your insurance premiums under “Property taxes, insurance, etc.” or the relevant expense category.
Always keep receipts. You might need them if CRA asks for proof. The amount paid, including tax, must match the information in your account.
CRA can request documentation up to six years after a tax year, so maintain organized records for at least that long. Digital copies are acceptable, scan or photograph your insurance documents and store them securely. Include both the policy declaration page and proof of payment.
If your employer provides group insurance, home coverage is not included. Group plans usually apply to health or dental. Home insurance needs to be bought directly. Contributions paid toward group health plans may be deductible. Home insurance is different. It follows separate rules.
A request to remove the tax must meet very strict criteria. A valid purchase exemption certificate must be presented. Few homeowners meet the eligibility criteria. Most requests are denied. You can contact the Canada Revenue Agency for more details.
Some policies qualify for direct deposit refunds if overpaid. Home insurance is not included. Those apply to health or disability benefits.
The cost of home insurance in Ontario is always taxable. You can’t avoid it. You can only reduce it by choosing a lower coverage. Or by qualifying for a deductible use.
Always review the full cost before committing. Taxes are part of the total. If anything looks wrong, contact your insurer right away.
Yes, in most cases, plan members still pay the applicable 8% sales tax. Home insurance is not covered under typical group benefits, even if you’re an employee.
Most insurers allow changes to your due date if requested in advance. Amounts charged after the following month may require additional information or approval.
If you change your new address mid-policy, your insurer may update the premium based on risk. In most cases, the tax remains the same, unless the coverage itself changes.
Tax rates are set by law, so it’s not possible to remove them based on opinion. The only exceptions require valid documentation and are reviewed case-by-case.
Disclaimer: This blog post is for general information only and does not constitute personalized advice. Please consult a licensed insurance broker to determine the insurance solution that best fits your specific needs.
Thinking of purchasing a condo? Learn what condo insurance is, what it covers, and why it matters before you buy so you can protect your home smartly.
Find out what Ontario homeowners actually pay for home insurance in 2026, what drives your premium up, and simple ways to cut costs without losing coverage.
A high home insurance deductible saves money on premiums—until a burst pipe floods the basement and that "savings" becomes a painful surprise. Your
Wondering what home insurance costs in Toronto? Get 2026 rate breakdowns, provider comparisons, and tips to save on your premium without cutting coverage.
Not sure which homeowners insurance is right for you? Compare top Canadian providers, real costs, and coverage tips to choose the best policy confidently.
Understanding the real difference between seasonal vs secondary home insurance can prevent denied claims and major out-of-pocket losses. Insurance
