What rising NatCats mean for Canada’s homeowners

Record-breaking insured damages exceeding $8.5 billion from severe weather events in 2024 are a stark reminder of the impacts of climate change and the need for homeowner clients to explore potential mitigations, notes rate aggregator LowestRates.ca.

It says risks driven by rising sea levels, stronger storms and more frequent wildfires are spurring insurers to re-examine their risk profiles that impact premiums. That can be bad news for homeowning clients in regions where NatCats are either frequent or on the rise.

“Climate change is significantly impacting weather patterns, leading to more extreme events and higher insurance payouts for insurers,” explains Steven Harris, licensed insurance broker and LowestRates.ca expert. “These increased costs are reflected in rising premiums for homeowners.”

He cites Calgary’s summer hailstorm as an example. “It was a costly $3 billion event that resulted in significant insurance payouts, forcing insurers to reassess risk and adjust premiums for residents. This creates a situation where adequately assessing and pricing for future risk becomes challenging — they need to account for past events, but also the uncertain future brought on by climate change,” Harris adds.

 

Related: 2024 catastrophic insured losses smash records

To mitigate risks exacerbated by intensifying weather patterns, and possibly save on premiums, he suggests clients consider:

• Installing preventative upgrades like storm shutters, impact-resistant windows, backflow valves, and sump pumps (preferably with battery backup).
• Altering landscaping to mitigate fire risk by moving plantings and other flammable materials away from structures, and waterproofing the home and grading the surrounding site to flow water away from the building.
• Inspect roofs regularly to monitor shingle integrity.

To better manage premiums, clients should go through annual coverage reviews to ensure all risks are accounted for and that coverage limits are adequate. If policy limits aren’t adequate to restore a home or its contents, or cover stays in hotels or other lodgings while restorations take place, that needs to be addressed.

In some cases, that can mean explaining additional coverages for things that aren’t in some standard policies, such as earthquake, sewer backup and overland flooding.

“Insurance premiums are directly influenced by risk assessment. Areas prone to flooding, hail, or other extreme weather events pose a higher risk to insurers,” Harris says.

“This makes it important for homeowners to understand their individual risk factors and ensure they have adequate coverage to protect their homes and finances. This includes considering factors like location, property type, and the potential for specific weather events in their area.”

 

Feature image by iStock/onurdongel