According to a 2019 report from the Canadian federal government, Canada is warming twice as fast as the remainder of the world, with the best temperature increases occurring within the North, the Prairies and northern British Columbia. Over time, we are going to see more precipitation, blizzards, wind, hail, floods, droughts, smog, wildfires and “extreme heat events” reminiscent of the warmth dome that scorched Lytton, British Columbia, in 2021. That means more weather-related damage to infrastructure, businesses and houses – and a corresponding increase in insurance claims.
Between 2009 and 2020, Canadian insurers spent a mean of $2 billion per yr on claims related to natural disasters (those leading to insured losses of $25 million or more) – greater than 4 times the common amount of $422 million paid out annually from 1983 to 2008, in keeping with the Insurance Bureau of Canada (IBC). The amount of injury has continued to rise. In 2022, insured losses from severe weather reached 3.1 billion US dollarsmaking it the third worst yr in Canadian history for insured losses. In 2023, losses will again reached 3.1 billion US dollarsThree quarters of the yr 2024 will see insurers still coping with the consequences of the July flash floods in Toronto and Southern Ontario – insured losses amounted to 940 billion US dollarssaid the IBC – and the forest fire in Jasper, BC, whose insured losses 880 million US dollars.
Severe weather is nothing recent to Canadians, but something has modified lately. The impacts of those events are felt more strongly, in keeping with IBC.
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While earthquakes will not be weather-related, they’re still a natural disaster that we cannot ignore. Canada experiences a mean of over 4,000 earthquakes per yr, most of that are so weak that they will not be felt, IBC reports. British Columbia is most vulnerable to earthquakes, but also they are common within the Ottawa and St. Lawrence River valleys, New Brunswick and off the coast of Newfoundland. A big earthquake near a populated area could cause significant damage and affect local and national GDP. (Earthquake home insurance is obtainable – ask your insurer.)
Watch: Home contents insurance and climate change
Do you wish insurance against climate change?
Many aspects affect the insurance market – from low rates of interest to rising costs of constructing materials. So it’s difficult to say how climate change alone will affect your constructing insurance. There isn’t any separate weather-related constructing insurance (at the least not yet).
What we do know is that certain areas of the country are at higher risk of floods, fires and other extreme events, and insurance premiums are accordingly high. However, nobody is proof against weather damage or its financial consequences. The IBC points out that Canadians are in danger from coast to coast. Of the highest 10 worst disasters in Canada, six occurred in Alberta and the remaining 4 in Ontario, Quebec and the Atlantic provinces.
Does your constructing insurance cover flooding?
Weather-related perils covered by standard home insurance policies typically include wind, hail, fire and lightning. Certain kinds of water damage are also covered—but, to the surprise of many Canadians, flood damage or water damage attributable to flooding is just not normally covered. Landslides, avalanches, earthquakes and other earth movements are also not robotically covered.
However, home insurance is evolving over time. Water is now the leading reason for property damage in Canada. In response, some insurers – reminiscent of Aviva, Intact, Pembridge and Unica – have been offering flood insurance since 2015. It is obtainable to over 90% of consumers and over 60% have it. When added individually to a house insurance policy, flood insurance costs about $10 to $30 per thirty days.
Still, insurers may refuse to insure homes in high-risk areas, putting many Canadians in danger. Planning is underway for a national flood insurance program; until it’s implemented, homeowners can get insurance from The Co-operators. It is the one insurer that gives flood protection for essentially the most at-risk areas, in addition to the one provider of insurance against storm surge (waves and flooding attributable to storms and hurricanes).
“As a cooperative insurer, we felt compelled to respond to the unmet need for residential water damage insurance in this country,” says Tara Laidman, assistant vice chairman of national product portfolio. “Over the past few years, weather has contributed to record levels of water damage in Canadian homes – a trend we expect to continue.”
How to get cheaper constructing insurance
Now that you realize how climate change affects your house insurance, what’s next? In June, a coalition of representatives from the insurance industry, disaster relief organizations, municipalities, indigenous organizations, environmental NGOs and research organizations – collectively often called Climate-proof Canada– called on the federal government to take motion against climate change, including a national climate change adaptation technique to protect against the hazards of accelerating floods, forest fires and warmth.
