Extreme weather fallout: Experts warn Canadian home insurance premiums to rise this year

As California deals with devastating wildfires, experts are warning homeowners about the impact of severe weather in Canada this year.

Home insurance premiums are expected to climb this year.

The insurance industry says it’s grappling with record-breaking losses from extreme weather events, labour shortages in construction driving up replacement costs and wait times, and inflation.

According to the Insurance Bureau of Canada, severe weather events caused more than $7.8 billion in insured damage across Canada last year. That’s more than double the $3.1 billion recorded in 2023.

It comes as Statistics Canada data shows that residential building construction costs have risen 66 per cent. Home replacement costs have risen 24 per cent from 2019, compared with a 19 per cent general inflation rate during the same time period.

“The home insurance industry is experiencing record claims losses while at the same time facing the challenge of rising replacement costs. The result is likely to be higher home insurance premiums for consumers this year when their policies renew, even if they haven’t made any claims,” says Daniel Ivans, RATESDOTCA insurance expert.

Ivans suggests shopping around for better deals instead of just renewing your policy annually.

Home insurers are not restricted by geographical area. Homeowners may also be able to save by purchasing insurance coverage with a company that is not in their immediate location.

“Given the severity and increasing frequency of extreme weather patterns and the increasing cost of replacement, it’s crucial for homeowners to ensure their policies provide the amount of coverage they need if the worst happens,” said Ivans.

Many homeowners in the L.A. fire zone are without insurance after insurers in the state refused to write new policies in areas they considered to be at high risk for wildfires.

A large portion of the state is considered to be in that category.

According to the government of British Columbia’s website, during major wildfires insurance companies may initiate temporary restrictions on the sale of new policies in areas of imminent threat.

As the threat eases, the restrictions ease as well.

“Renewals of existing policies continue to take place, regardless of the threat situation. If you are trying to purchase new insurance in a wildfire threatened area, contact your insurance representative to discuss your options,” reads the website.