Changing Climate and What it Means for Your Home Insurance
by adminCommunities across the globe are feeling the dramatic effects of climate change. Extreme events like forest fires, flooding, and blizzards are increasing in frequency and severity, costing Canadian insurance companies billions per year in weather-related insurance payouts. But what does that mean for your home insurance premiums, and what can you do to protect your home from losses due to extreme weather?
Insurance Companies Reach Record Payouts
2021 was one of the costliest years on record for Canadian home insurance companies, triggered partly by forest fires and record flooding in British Columbia. While 2022 was comparatively moderate, events like hurricanes in the East, severe storms in the Prairies, and wildfires in the West cost insurance companies hundreds of millions of dollars.
According to the most recent Canadian report on climate change, Canada is warming at nearly twice the global rate, and the consequences are “effectively irreversible.” With the number and severity of extreme weather events on the rise, insurance industry experts are warning that Canadians can expect their premiums to continue to climb and that some insurers may simply stop offering certain coverage in areas they deem too risky.
Home Insurance Premiums on the Rise
Over the last decade, Canadians have lived through nine of the ten worst weather disasters on record. During that same period, property damage claims climbed 42%, and average home premiums rose at three times the inflation rate. The increase in the number and magnitude of insurance payouts have some insurance industry experts worry that Canadian home insurance could soon become unaffordable as homeowners bear the brunt of climate change-induced weather events and their effects on home insurance prices.
However, there are strategies that every Canadian homeowner can employ to help increase their protection and reduce their home insurance costs.
What Can Canadians do to Keep Their Properties Safe?
1. Know Your Policy
Many homeowners are only vaguely aware of their home insurance coverage and that’s a risky mistake. One of the most significant contributors to recent home insurance claims across Canada has been overland flood damage. Unfortunately, too many families learned too late that they did not have the right insurance coverage for these types of weather events.
Flood damage or damage resulting from flood waters is rarely included in any basic insurance policy. Instead, similar to earthquake or landslide protection, flood water protection is an additional option that must be purchased separately and added to your existing policy.
2. Install a Sump Pump
A backwater valve or sump pump can help protect your home in two ways; first, should unexpected flooding occur, the pump will help force water away from your home’s foundation. Secondly, a sump pump may earn a reduction in your home insurance premiums.
Another flood protection measure worth considering is smart water detectors, which can alert you immediately if water enters your home while potentially reducing your insurance premiums.
3. Keep Your Property Well Maintained
Maintaining your property can significantly affect your home’s risk of flood, fire, and other weather-related damage. Be sure to:
• Keep your gutters and downspouts clear of leaves and debris
• Angle your downspouts away from your foundation
• In fire-prone regions, keep vegetation at least 5 feet away from your home
• Consider impact-resistant roofing materials in hail-prone areas
• Limit the number of flammable coniferous trees, like Pine and Spruce, around your property and consider planting deciduous trees like Maple or Birch instead
Talk to An Insurance Broker for the Best Advice If you have any questions or concerns regarding your home insurance converge or your premiums, an insurance broker is your best resource for up-to-date information on the products available to you.