Impact of climate change on home insurance
Canadians have experienced the effects of climate change first-hand in recent years with a noticeable increase in extreme weather events. From wildfires and hailstorms in Alberta and Ontario, to flooding in British Columbia, it’s clear that severe weather is on the rise.
Both insurers and homeowners need to consider the impact climate change will have on the future of insurance, and what they can do now to prepare for climate change-related risks.
How climate change is impacting insurance
According to the Insurance Bureau of Canada, the average yearly cost of insured catastrophic losses in Canada has increased significantly in the past decade—from around $422 million per year between 1983 and 2008 to the “new normal” annual average of $2 billion.1
This upward trend in severe weather events means large losses are expected to get larger and occur more frequently. In fact, the Insurance Institute of Canada predicts that the average annual severe weather claims paid by insurers in Canada will double over the next 10 years—increasing from $2 billion per year to $5 billion.2
Insurance regulators and policymakers still need more information to understand exactly what impact climate change will have on the future of insurance. With insurable claims expected to double within the next decade, they’ll need to carefully balance coverage availability with affordability for homeowners.
Get the coverage you need
It’s important to know that you have the coverage you need before something happens. Review your policy regularly to understand what your policy currently covers for and if additional coverage is needed.
Most standard home insurance policies provide coverage for damage caused by fires, windstorms, hurricanes, tornadoes, and other common weather events. However, with extreme weather events on the rise, many homeowners are exploring additional coverage options for weather-related damage not typically covered by a standard home insurance policy—such as overland water coverage or sewer backup coverage.
Speak with your insurance broker to discuss your current policy and to explore additional coverage options. Your broker will work with you to make sure you have the coverage you need to get back to where you started if disaster were to strike.
Learn how to protect your home during extreme weather events
There are steps homeowners can take to protect their homes from extreme weather conditions, such as severe wind and wildfires.
The following infographic from the Institute for Catastrophic Loss Reduction shares best practices for protecting your home from severe wind and tornadoes:
This infographic, also from the Institute for Catastrophic Loss Reduction, shares best practices for reducing your home’s risk of damage from wildfires:
More weather-related damage prevention infographics and other helpful resources for homeowners are available for free on the Institute for Catastrophic Loss Reduction’s website.
While there’s still more to learn about climate change and the impact it will have on insurers and homeowners, it’s important to know that your home, belongings, and loved ones are protected.
If you would like to get a quote for home insurance, connect with an TW Insurance broker today at 1-888-338-2685.
Insurance Bureau of Canada
Insurance Institute of Canada