Finance

How Extreme Weather and Inflation Are Driving Up Home Insurance Costs in Canada

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If you are feeling that your personal finances are strained when your home insurance policy is renewed, you are not alone. Home insurance premiums are rising across Canada, and while some regions are getting hit with bigger increases than others, it seems like everyone is facing higher costs.

There are several reasons for the steep increase in premiums happening lately, including inflation, more frequent extreme weather events, and tight competition for contractors in many of the country’s labour markets.

What Can You Do About Rising Home Insurance Costs?

Paying higher monthly premiums might sound like something to avoid, but unless you get the right policy for your home, you can wind up underinsured and unprotected if a loss occurs. Given the rising cost of construction and replacing lost belongings, you may even want to sit down with your insurer to make sure your policy covers everything so that you are not further out of pocket when a loss occurs.

If a fire or flood affects your home, property damage lawyers can help you file your claim and push your insurer to meet their financial obligations as agreed upon in your policy. With higher costs putting pressure on insurance companies’ bottom lines, you may need the help of a property damage lawyer now more than ever.

Before an accident happens, check your insurance policy when it is time to renew, including coverage limits. If it is too late to change your policy, you should consider getting help with the claims process.

Why Are Home Insurance Premiums Rising?

#1 Inflation

Inflation is the big news story of the day, and it is having an impact on just about every industry, including insurance.

Inflation is hitting insurance premiums because it is becoming costlier to replace lost belongings and purchase construction materials. As the cost of things like furniture and clothing rises, the more you risk exceeding your policy limits should you have to replace those things.

Most home insurance policies have built-in inflation guards, causing your premiums and your limits to rise. However, after decades of low inflation, many are not equipped to handle the inflation increases Canada has seen lately.

#2 Extreme Weather

The impact of climate change is having a direct impact on homeowners as extreme weather events become increasingly common at home and around the globe.

In Western provinces, wildfires and flooding are major concerns, as the last few years have seen significant increases in claims related to these natural disasters.

Home insurance premiums in the province of Ontario have gone up 10% in the last year, and that’s in a part of the country generally less prone to wildfires than out West. Parts of Ontario that face increasing flood risks have seen the biggest increases, especially as more urban and suburban areas become vulnerable to heavy rainfall.

#3 Tight Labour Markets

The construction industry in Canada is facing acute labour shortages, and that’s causing stiff competition between developers, contractors, and homeowners looking to get repairs done. As competition for contractors ramps up, homeowners and their insurance companies are facing steeper costs. Even though there are consistently new jobs in the trades, demand continues to outstrip new workers.

The problem can be even worse in parts of the country that are struck by natural disasters like wildfires or flooding. It puts a major strain on locally available contractors, and it can easily lead to delays that will increase other insurance costs, such as coverage for Additional Living Expenses.

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