Factors Affecting the Cost of Home Insurance Premiums
According to the Director of Consumer and Industry Relations at the Insurance Bureau of Canada, (IBC), home insurance rates increased on average 8.4% from May 2021 to May 2022.
Economic pressures from ongoing global supply chain issues, historic inflation, and labour shortages are driving up insurers’ replacement costs at a time when the effects of climate change are also leading to an increase. Weather related events are becoming more frequent and more devastating. Also, if materials take longer to arrive, the size of a claim can increase exponentially with the insurance provider paying more for the policyholder’s Additional Living Expense (ALE).
As incidents of severe weather increase across the country, flooding is a peril for which more and more insurance providers are adjusting coverage, all the more so in low-lying areas. It has never been more important to have water damage protection where coverage is available.
In 2021 insurance claims resulting from severe weather events cost Canadian insurers $2.2 billion. The projected claims costs due to the severe wind and rainstorm which occurred this past May in Ontario and Quebec are about $875 million.
Bundling home and auto insurance policies, making sure all available discounts you qualify for are being applied, and increasing deductibles will help save premium.