Climate Change singled out for dramatic increase of Ontario and Alberta home insurance costs

TORONTO, June 2, 2021 – As climate change-related natural disasters accelerate in terms of both frequency and cost, Canadian homeowners are increasingly feeling the financial impact in their insurance premiums. The average cost of home insurance has grown at more than three times the rate of inflation over the past decade as personal property damage claims have grown 42 per cent nationwide over the same timeline according to data from RatesDotCa. Home insurance rates in Ontario and Alberta have grown at multiple times the rate of inflation over the past decade as personal property damage claims have grown 42 per cent nationwide over the same timeline.

Alberta has seen the most dramatic growth, with average home insurance rates in the province rising 140 per cent since 2011 from $741 to $1,779 as of early 2021. In Ontario, premiums have grown by 64 per cent over the same period, from $782 in 2011 to $1,284 this year. According to the Bank of Canada, inflation over the past decade has totaled less than 17 per cent.

Growth in total property claims made through home insurance policies explains this trend. According to the Insurance Bureau of Canada, personal property claims nationwide have more than tripled since 1996, rising 213 per cent from $2.3-billion to nearly $7.2-billion. That is in line with global trends, as Australia’s QBE Insurance Group said in its 2020 annual report, the economic cost of natural disasters has exceeded the 30-year average for seven of the past 10 years.

“Climate change is already having direct financial impact on individual Canadian homeowners,” said Jameson Berkow, managing editor of RATESDOTCA.

Homeowners are recommended to protect themselves from the rising costs of climate change by checking their policy to ensure they are covered for any associated event that might occur. Optional coverage of overland flooding insurance has been available in Canada since 2013 and according to the Institute for Catastrophic Loss Reduction, and they recommend every homeowner should consider adding it to their policy even if they don’t live in a floodplain.  

Other tips to keep homes safe from extreme weather:

• Installing a back water valve/sump pump in basements (telling an insurance provider about this could result in a discount)
• Regularly cleaning gutters/pipes
• Adjusting downspouts away from homes and onto the street
• Clearing five feet of vegetation around a house, which can halve the risk of a home being destroyed by a wildfire
• Using impact-resistant materials on roofs, especially in a hail zone
• Avoiding planting coniferous trees, which are more flammable than deciduous trees
• Getting water flooding coverage included in insurance policies (check with insurance provider since most require this to be purchased separately)

Personal property damage claims growth rate is based on Insurance Bureau of Canada (IBC) data from 2009 through 2019, the most recent ten-year period available.

Below is a TOTAL COST OF HOME INSURANCE (excluding condo/tenant policies) year over year since 2011.

ALBERTA:

ONTARIO