Why is my home insurance changing?

May 6, 2013 2 minute read

More extreme weather, more frequently

Canada’s weather is becoming warmer, wetter and more violent. The warmest year on record was 2010, when the average temperature was 3°C above normal. In the past 50 years, mean precipitation has increased by approximately 12%. Catastrophic weather events used to happen every 50 years; now we experience one every five to seven. What was once exceptional is now becoming the norm.

This comes with a price. Since the 1980s, severe weather-related claims payouts have doubled every five to 10 years. Insurance companies have processed $1 billion in weather disaster claims every year since 2009. Compare that to 2008, when payouts were $392 million. In 2007? They amounted to $167 million.

Aging infrastructure

These more frequent and intense weather events are putting Canada’s aging infrastructure to the test. The Government of Canada has committed $53.5 billion to improving infrastructure over the next 10 years; however, weather doesn’t need to be “extreme” to cause a great deal of damage. Although Canada escaped the brunt of Hurricane Sandy in 2012, the storm still caused more than $106 million in damage. In 2005, Toronto experienced enough rain to back up sewers and flood basements at a cost of $500 million. In fact,  sewer-backup damage has doubled in the past 11 years.

Home design and contents

How we build houses and what we put in them are also causing claims values to increase.  Theaverage home in 2013 is now more than double the size relative to the 1950s. More people are renovating or developing their basements. Once a place for storage, basements today house valuables, such as media equipment, home offices, and wine rooms. Placing those items below ground level can have a significant impact on insurance. Water damage has surpassed fire as the leading cause of insurance claims, with the Canadian insurance industry paying approximately $1.7 billion annually for damage.

What you can do

Make regular home maintenance a priority.  Routinely inspect plumbing for signs of wear and replace old or worn hoses. Consider installing a sump pump and/ or backwater valve.  Find and seal any foundation or basement cracks.  And if you’re heading out of town, don’t forget to have someone check on your home on a regular basis.

Speak with a BrokerLink broker to ensure you have the coverage you need.  Many policies specifically exclude damage from ground water, water from the rising of the water tables, repeated seepage and leakage and the cost to repair faulty workmanship.  Sewer back-up is not included as part of your home insurance policy and needs to be added as extra coverage to your policy

To learn more about preventative measures you can take around your home to help reduce your home insurance premiums, visit our tips.