Broker points to climate change as reason for rising home insurance rates

Home insurance rates are rising throughout Canada, and one broker is pointing to climate change as the cause.

A report from the Insurance Bureau of Canada revealed that the insured damage for natural catastrophes such as floods, storms, and tornadoes reached $1.9 billion in 2018. And insurance broker Traci Boland told CBC News that they expect premiums to rise even higher.

“I would say that they [insurers] are preparing themselves because our weather in Canada is becoming extreme,” Boland, a partner at Ontario West Insurance Brokers, told CBC News. “Our century storms are now every year and so they need to be prepared for this and do their due diligence and raise their prices so when these catastrophes happen, they have the funds available and they are able to help their clients.”

“This year, we’ve seen most of the insurance companies in Ontario take rate hikes and they’ve ranged from, on top of inflation, 5% to 10%.”

According to Pete Karageorgos, director of consumer and industry relations of the Insurance Bureau of Canada (IBC), the rise in premiums is directly linked to climate change.

“Up until about a decade ago, on an annual basis, insurance companies across Canada were paying out approximately $400 million a year due to severe weather,” Karageorgos told CBC News.

“In the last 10 years, that figure has jumped on average to about $1 billion a year. Last year actually saw a record payout.”

To help with the rising costs, Boland said that homeowners can choose individual insurance policies that cover the most risk-prone parts of their house.

“If you have a fully finished basement, you want to make sure that you have enough coverage to replace everything,” said Boland.

“[But] If you have an unfinished basement, you can choose to only insure the furnace, washer, and dryer.”

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