What Your Home Insurance Doesn't Cover: A Waterloo Region Guide for Buyers and Homeowners

Most Waterloo Region homeowners believe their home insurance has them fully covered. The reality? There are some significant gaps in standard Ontario home insurance policies that could leave you financially exposed — and many people only discover them when they try to make a claim.

Whether you're a current homeowner reviewing your coverage, a buyer evaluating a potential purchase, or a seller preparing your home for market, understanding what your policy actually covers — and what it doesn't — is essential knowledge.

Here's what every Waterloo Region homeowner needs to know.

Water Damage: Ontario's Most Expensive Surprise

Water damage has overtaken fire as the leading cause of home insurance claims across Canada. According to the Insurance Bureau of Canada (IBC), insured catastrophic losses now routinely exceed $2 billion annually, with the majority attributed to water-related damage. Yet many homeowners don't realize that their standard policy only covers certain types of water damage.

Here's how it typically breaks down in Ontario.

What's usually covered under your base policy: Sudden and accidental water damage from inside your home — a burst pipe, an overflowing bathtub, a malfunctioning washing machine, or a leaking hot water tank.

What's usually NOT covered without additional endorsements: Sewer backup, overland flooding, and groundwater seepage. These are three separate endorsements you need to add to your policy, and each covers different scenarios.

Sewer backup coverage protects you if water or sewage backs up into your home through floor drains, toilets, or other plumbing. This is especially relevant in older Waterloo Region neighbourhoods where aging municipal infrastructure can be overwhelmed during heavy rain. Sewer backup endorsements can be added to your policy for as little as $20 per year, though costs vary depending on your risk factors.

Overland water coverage protects against damage from surface water entering your home — think heavy rainfall accumulation seeping through basement windows, or the overflow of a nearby river, creek, or lake. This is a relatively newer endorsement that many Ontario insurers began offering in response to increasingly severe weather events across the province. It typically costs between $10 and $30 per month, depending on your property's risk profile.

Here's an important detail many Ontario homeowners don't know: if overland flood insurance is available to you at a reasonable cost and you choose not to purchase it, you may not qualify for Ontario's Disaster Recovery Assistance program in the event of a natural disaster. That government program is designed primarily for residents who cannot access private flood insurance — not for those who simply chose not to buy it.

Groundwater coverage is the newest addition, protecting against water that seeps up through your foundation from underground sources. Not all insurers offer it yet, but it's worth asking about.

The bottom line? If all you have is your base policy, you're only covered for water damage that starts inside your home. Everything that comes from outside — which is often the most devastating and expensive kind — requires additional coverage.

Older Homes and Insurability: A Waterloo Region Reality

The Waterloo Region is full of beautiful older homes with real character — century homes in Uptown Waterloo, established neighbourhoods in Central Kitchener, heritage properties in Galt. But older homes can come with features that make insurance more complicated and more expensive.

Knob and tube wiring, found in many homes built before the 1950s, is one of the biggest insurability challenges in Ontario. This early electrical system lacks the ground wire that modern wiring includes, which creates a higher risk of fire and electrical shock. Many Ontario insurance companies will either refuse to insure a home with active knob and tube wiring, require a certified electrician's inspection through Ontario's Electrical Safety Authority (ESA), or charge significantly higher premiums. In some cases, full replacement with modern copper wiring is required before a policy will be issued. Replacement costs typically range from $7,000 to $25,000 depending on the size of the home.

Aluminum wiring, common in homes built during the 1960s and 1970s, presents similar challenges. It was widely used because copper prices were high at the time, but the connection points can corrode over time, creating a fire hazard. Many insurers require a complete inspection by a certified electrician, and depending on the condition, an upgrade to copper may be needed before coverage is approved.

60-amp electrical service is another red flag for insurers. Modern homes typically have 100-amp or 200-amp service panels. If your home still has the original 60-amp service, your insurer may require an upgrade.

Galvanized steel plumbing, found in many homes built before the 1950s, has a life expectancy of roughly 40 to 50 years. Over time, these pipes corrode from the inside, reducing water pressure and eventually failing. Insurers may require replacement before offering coverage.

Oil tanks are another consideration. According to the Insurance Bureau of Canada, a home with an exterior oil tank older than 15 years or an interior tank older than 25 years may not be insured. The environmental liability from an oil tank leak can be enormous, making this a serious concern for both buyers and sellers.

For buyers considering an older Waterloo Region home, these issues should be on your radar well before you make an offer. A thorough home inspection that specifically checks electrical, plumbing, and heating systems is essential — not just for your own peace of mind, but because your ability to get insurance (and therefore a mortgage) may depend on it.

What Wear and Tear Actually Means

Here's a common misconception: many homeowners assume that if something in their home breaks, insurance will cover it. But standard Ontario home insurance policies are designed to cover sudden and accidental losses — not gradual deterioration.

That means damage from wear and tear, rust, corrosion, mould from humidity or slow leaks, and general aging of your home's systems is not covered. Your roof that's been slowly deteriorating for years? Not covered. The mould growing behind the bathroom wall from a long-term moisture issue you didn't notice? Not covered. The foundation crack that developed gradually over a decade? Also not covered.

This is why regular home maintenance matters so much — both for protecting your investment and for ensuring your insurance claims are valid when you need them.

The Gaps That Catch People Off Guard

Beyond water damage and aging systems, there are several other common exclusions in Ontario home insurance policies that surprise homeowners.

Ground movement — damage from earthquakes, landslides, and soil settlement is generally excluded from standard policies. While major earthquakes aren't top of mind for Waterloo Region residents, soil settlement and shifting can certainly affect foundations over time.

Vermin and pest damage — if squirrels chew through your wiring, mice damage your insulation, or carpenter ants compromise your deck, your insurance won't cover the repairs. Damage from insects and rodents is a standard exclusion across Ontario.

Frozen pipes (with conditions) — while a burst pipe is typically covered, most policies include specific conditions about frozen plumbing. If you leave your home unheated during winter and pipes freeze as a result, your claim could be denied. Most policies require you to maintain adequate heat or have someone check on the property regularly. This is particularly important for snowbirds or anyone leaving their Waterloo Region home for an extended winter period.

Home-based business — if you run a business from your home and something happens — a client is injured, business equipment is damaged, or you face a liability claim — your standard home insurance likely won't cover it. You may need a separate home business endorsement or a commercial policy.

Cannabis cultivation — since legalization, this has become a grey area. In Ontario, you can legally grow up to four cannabis plants for personal use, and most insurers will treat those four plants like any other legal plant in your home. However, if you exceed the legal limit, make unauthorized modifications to your home for growing (like rewiring or adding water systems), or fail to disclose the activity to your insurer, you could face denied claims or a voided policy entirely. The modifications themselves — additional lighting, electrical changes, water diversion — can increase fire and flood risks, which is why transparency with your insurer matters.

Vacant homes — if your home sits vacant for an extended period (typically 30 days or more, though this varies by insurer), your coverage may be significantly reduced or voided. This matters for sellers who have already moved out, for estate properties being settled, or for investment properties between tenants.

Why This Matters for Buyers and Sellers

If you're buying a home in Waterloo Region, insurance isn't just a line item on your closing checklist. Your ability to insure a property directly affects your ability to get a mortgage. If a home has knob and tube wiring, an aging oil tank, or other insurability issues, your lender may require those issues to be resolved before financing is approved.

A knowledgeable buyer's agent will flag potential insurability concerns during the home search — before you fall in love with a property and find yourself scrambling to address costly upgrades. This is especially important in our region, where so many desirable neighbourhoods feature homes with decades of history.

If you're selling, being proactive about potential insurance red flags can prevent deals from falling apart. Understanding what a buyer's insurer might require — and addressing it in advance — makes your home more attractive and your transaction smoother.

The Smart Approach: Review, Ask, and Protect

The single best thing you can do? Actually read your policy — or better yet, sit down with your insurance broker and walk through it. Ask specifically about sewer backup, overland water, and groundwater endorsements. Ask about any exclusions related to the age of your home's systems. Understand your obligations around maintenance and vacancy.

Insurance brokers in Ontario work with multiple companies and can help you compare options and identify gaps. It's worth the conversation, especially if your policy has been on auto-renewal for years without a review.

And if you're in the process of buying or selling a home in Waterloo Region, make insurance part of the conversation from the beginning — not as an afterthought at closing.

Team Pinto: Looking Out for the Whole Picture

At Team Pinto, we believe that great real estate guidance goes beyond finding the right home at the right price. It means helping you understand the full picture — including the details that can save you thousands of dollars and a world of stress down the road.

Whether you're buying your first home, selling a property you've owned for decades, or simply want to understand more about navigating the Waterloo Region market, we're here to help you make informed decisions every step of the way.

Contact Team Pinto today at 519-818-5445 or visit teampinto.com to start the conversation.

This article is for general informational purposes only and is not a substitute for professional insurance advice. Insurance policies, coverage options, and requirements vary between providers. Always consult with a licensed insurance broker or your insurance company for advice specific to your situation.