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No-frills insurance is for homes that fall outside of normal insurance standards. It means that your house has structural defects or problems that make it uninsurable by normal standards.
No-frills insurance provides very limited coverage. You are essentially self-insuring your home, paying 100% of the costs that stem from future perils.
You may be wondering if no-frills insurance makes sense if you’re building or renovating a home. Even then, it does not provide all the coverage you need (the product you need is builder's risk insurance). No-frills policies usually only provide insurance against fire damage. Liability, water, theft, and other risks are not covered (although some insurers may allow you to add extra coverage).
Overall, no-frills home insurance isn't recommended for the average homeowner. Removing protection to save a few hundred dollars annually can lead to significant losses in the long run.
Keep reading to learn more about no-frills insurance and how it differs from other, more common types of home insurance.
No-frills home insurance coverage is the most limited type of home insurance you can acquire. In most cases it only covers fire, however some insurers may offer no-frills policies that also cover theft and wind damage.
No-frills insurance is essentially a coverage of last resort. Homes that are vacant or have extensive plumbing and electrical issues fall into the no-frills home insurance category. Insurance professionals do not recommend no-frills insurance for the average homeowner.
Broad insurance is a middle-of-the-road policy that offers more coverage than no-fills but less than comprehensive insurance, which covers the dwelling and all its contents from every type of insurable risk.
The coverage provided by no-frills insurance is limited compared to other home insurance products. It’s considered a niche product and isn’t recommended for the majority of homeowners. Here’s how it measures up against conventional policies broad and comprehensive insurance policies.
| Protection | No-frills | Named perils | Broad form | Comprehensive |
|---|---|---|---|---|
| Main dwelling | Only named perils (fire) | Only named perils | Covered | Covered |
| Contents | Not covered | Only named perils | Only named perils | Covered |
| Additional living expenses | Not covered | Covered | Covered | Covered |
| Personal liability | Not covered | Covered | Covered | Covered |
| Voluntary medical payments | Not covered | Covered | Covered | Covered |
| Voluntary property damage | Not covered | Covered | Covered | Covered |
No-frills insurance policies cover damage due to a fire-related incident. Generally, these policies do not cover things like:
Water damage
A typical home insurance policy covers sudden and accidental water damage (from burst pipes, watermains, or overflowing appliances); no-frills insurance does not include this coverage.
Vandalism
No-frills insurance doesn’t provide coverage against acts of vandalism, such as broken windows and locks, graffiti, and damage to lawns and shrubbery.
Personal liability
No-frills insurance doesn’t include any benefits for legal costs, nor does it provide any benefits for voluntary medical or property payments.
Storm damage
Clean-up from fallen trees, wind or hail damage, or lightning strikes are excluded in a no-frills insurance policy.
The type of home insurance you need depends on the condition of your home and the value of your contents. A home that is left vacant or has unusually high repair issues like old plumbing and electrical needs would be a good candidate for no-frills insurance.
It’s important to understand that no-frills home insurance in Canada is very limited. It may cost you less, but it will only cover fire damage, with no protection for your contents or other comprehensive coverages such as liabilities or additional living expenses. Talk to your insurance provider and assess your needs carefully as the coverage you need may be more than what no-frills has to offer.Consider the savings from no-frills coverage against the potential costs of an event that is not covered.
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Not all insurance companies offer no-frills insurance. Speak with an insurance professional to find out if your current insurer or another insurer provides it.
LowestRates.ca can provide a quote for standard home insurance. This will also put you in touch with an insurance broker, to whom you can direct your questions about no-frills home insurance.
No-frills insurance is a niche product and is not offered by most insurers.
Home insurance costs can depend on many things, even if it is no-frills home insurance. Insurers who are assessing risk will consider the cost to rebuild the home, its location, and whether it is vacant or in disrepair (or both) when deciding on cost.
Liability coverage is not included in no-frills insurance. No-frills insurance provides coverage against limited perils, and usually only fire damage.
Standard home insurance products (broad and comprehensive) do include liability coverage. Liability coverage provides reimbursement for medical and legal fees stemming from bodily injuries sustained on your property. Liability coverage also extends to property damage caused to another person’s property.
Joel Kranc
About the Author
Joel Kranc is an award-winning writer, author and journalist. Most of his experience lies within the institutional investment and financial services space. He also covers a variety of business topics for publications in North America and the UK.
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