- Listing a property doesn’t change who owns it.
- Standard practice is for the seller to keep the property insured right through to closing.
- As a general matter, appropriate ownership-type coverage should continue through closing and possession, ending only once the transfer is complete and the buyer’s own insurance is in effect.
Once your sale is firm, it’s tempting to think of the home insurance bill as one more thing you can cross off the list. It isn’t — not yet. Until closing actually happens, the home is still legally yours, and so is the risk of something going wrong with it.
Knowing exactly when to keep your policy in place, when it can safely end, and what changes if you move out before closing helps you avoid an expensive coverage gap at the worst possible moment.
This article walks through how home insurance and risk typically work between an accepted offer and closing day.
Why You Shouldn’t Cancel the Day You List
Listing a property doesn’t change who owns it. Showings, inspections, weather events, and everyday accidents can all happen while you still hold title — and until closing, you’re still the one with an insurable interest and, generally, the liability exposure that comes with ownership. Cancelling coverage the moment your sale becomes firm leaves that entire window unprotected.
Insurance and Risk of Loss Under the Agreement of Purchase and Sale
Standard practice is for the seller to keep the property insured right through to closing. Agreements of Purchase and Sale generally include terms addressing what happens if the property is damaged between signing and closing — sometimes called risk-of-loss provisions. These terms exist precisely because ownership, and therefore who bears the risk, doesn’t transfer until closing actually happens, not on the date the agreement is signed.
When Coverage Should Actually End
As a general matter, appropriate ownership-type coverage should continue through closing and possession, ending only once the transfer is complete and the buyer’s own insurance is in effect. The exact date and time your policy should run through is worth confirming directly with your lawyer and your insurer rather than guessing based on the closing date alone — closings can be delayed, and a policy that lapses a day too early is a real problem.
If You Move Out Before Closing
Vacant or unoccupied homes carry a different risk profile than occupied ones, and many standard homeowner policies limit or exclude certain coverage once a home has been empty for an extended period. If you plan to move out before your closing date, don’t assume your existing policy keeps working exactly the same way — notify your insurer, and ask specifically whether you need separate vacant-property coverage for the gap between move-out and closing.
Buying and Selling on the Same Day
Many Ontario sellers are also buying their next home, often with both closings scheduled for the same day. That overlap deserves its own attention: your new policy on the home you’re buying needs to be in effect at the moment you take possession there, which may not line up neatly with the exact moment your sale on the old property finishes. Tell your insurance broker about both transactions together, rather than treating them as two unrelated calls, so there’s no gap — and no accidental double-paying — between the two policies.
Coordinating With Your Lawyer and Insurer
- [ ] Tell your insurer as soon as you list, not just once you have an accepted offer.
- [ ] Ask specifically about vacancy provisions if you plan to move out before closing.
- [ ] Confirm with your lawyer the exact date your coverage should carry through to.
- [ ] Keep your policy active until you have confirmation that closing has actually completed.
- [ ] Arrange new insurance for your next home to begin exactly when you take possession there.
Frequently asked questions
Can I cancel my home insurance the moment my sale becomes firm and unconditional?
It’s not recommended. You still own and are legally responsible for the property until closing actually happens — when title transfers and funds are exchanged. Keep coverage active through that date, and confirm the exact timing with your lawyer.
What if the home is damaged after the agreement is signed but before closing?
This is exactly what risk-of-loss provisions in the Agreement of Purchase and Sale are meant to address. Contact your lawyer immediately if this happens — don’t try to resolve it informally and directly with the buyer.
Do I need to tell my insurer I’m selling even before I have an accepted offer?
It’s generally good practice to keep your insurer informed once you list, since factors like showings, staging, or a planned move-out date can affect your coverage. Check your specific policy’s notification requirements.
Does the buyer’s insurance start automatically when we close?
No. Buyers need to arrange their own policy to be in effect as of closing — this doesn’t happen automatically, and mortgage lenders typically require proof of insurance before releasing mortgage funds.
I’m buying my next home the same day I sell this one — do I need two policies overlapping?
Usually you’ll want your new policy to begin exactly when you take possession of the new home, without necessarily overlapping your old one for an extended period. Talk to your insurance broker about both closings together so the timing lines up correctly on both ends.
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