Climate change is a global concern and over the last few years, extreme weather events have become more commonplace. In Canada, we have seen our fair share of wildfires, storms, and floods that have devastated some communities as these events become more frequent and cause extensive damage.

Last year alone, severe weather damage caused $3.1 billion in insured damage, according to the Insurance Bureau of Canada, making it the 2nd year in a row that exceeded the 3 billion mark. And this year, we are looking to follow that trend.

So, how is this affecting Canadians and insurance rates across the country? Let’s take a look.

What is Climate Change?

According to the UN, climate change refers to long-term shifts in global temperatures and weather patterns. Burning fossil fuels (coal, oil, gas) and massive factory farming generates greenhouse gas emissions that act like a blanket wrapped around the Earth, trapping the sun’s heat and raising temperatures.

The main greenhouse gases include carbon dioxide and methane. Some examples of these gasses are gasoline for driving a car, coal for heating a building, and methane gas from farm animals.

As greenhouse gas emissions blanket the Earth, they trap the sun’s heat, leading to global warming and climate change. The world is now warming faster than at any point in recorded history.

Extreme Weather Events

Over the last decade, we have seen many catastrophic weather events. Some of these have included the Fort McMurray wildfires in 2016, the flooding of BC’s Fraser Valley in 2021, and the devastation from Hurricane Fiona in the Maritimes in 2022, just to name a few.

Startling new data has shown that the insured catastrophic losses in Canada routinely exceeded 2 billion dollars annually (mostly water-related damage) and are now reaching new heights of over $3 billion, a trend that is gaining momentum. This is a far cry from $422 million a year in the decade before 2008 for severe weather-related losses.

Rising Insurance Rates

With severe weather events worsening, they are also becoming more expensive; the cost of property claims continues to rise, and home insurance premiums with it. These increases impact a multitude of people from homeowners, to insurance providers, governments, and taxpayers.

With worsening disasters fueling higher premiums, it can be difficult for people to obtain the appropriate protection for homes and businesses.

Why? Because the risks are becoming too great for the insurance industry to bear and the weather-related insurance payouts are exceeding the home insurance premiums the insurers are collecting. So, to protect their revenues, many insurance companies are increasing their premiums.

And, in some cases, they may even stop providing coverage in areas with very high or uncertain climate-related risks. This decreases competition, leaving fewer choices and increasing prices.

Preventative Measures

Since there’s very little that homeowners can do to mitigate the ongoing severe weather events across the country, there are still things they can do to prepare for the worst. Understanding the biggest climate-related threats in your region, and anticipating how they might affect your property will go a long way to keeping your home safe, warm, and dry.

Here are some preventative measures for homeowners to floodproof their property to help alleviate the risk of flooding :

• Regularly clean your gutters/pipes
• Keep the downspouts pointing away from your house
• Install a backwater valve/sump pump in your basement
• Seal any cracks in walls, floors, windows, and the foundation
• Clear any debris from curbside grates (if there are any near your home) to allow water to drain into a storm sewer
• Use impact-resistant materials on your roof (especially in a hail zone)
• Add overland flood insurance to your current policy

You can also take steps to fireproof your property in preparation for wildfire season (which has typically become longer in most regions of the country).

Here are a few things homeowners can do to safeguard their homes from a wildfire :

• Rake up dead leaves/dry twigs and get rid of dry vegetation around your home
• Keep your grass shorter than 10 cm
• Avoid planting coniferous or evergreen trees which are more flammable than deciduous trees
• Clear five feet of vegetation around your home. (This can mitigate the risk of a home being destroyed by a wildfire)
• Upgrade roof, doors, and siding with fire-resistant materials, and use dual-paned windows
• Keep patio/decks free of debris, dead plants, and other flammable items
• Store any firewood and lumber away from your home

All these tasks should be done around your home and other structures on your property including sheds, barns, and garages.

Climate Change Insurance?

Since separate weather home insurance doesn’t exist, there are still add-ons available to protect you and your home from severe weather incidents. You can get additional optional coverage (also referred to as riders or endorsements) to add to your current home insurance policy.

Here’s a quick look at some typical home insurance endorsements :

• Overland water coverage
• Claim protector add-on
• Service line endorsement
• Sewer backup coverage

With water-related damage being Canada’s top cause of property damage in 2022, some insurers now offer overland flood insurance coverage (first introduced in 2015) to most of their customers. This can be added to a separate policy for additional protection.

Feeling The Pinch

Property owners are feeling the pinch with the frequency of severe weather events happening across the country. With disaster claims having more than quadrupled over the past 15 years, insurance is getting more expensive and more limited.

While climate change is reshaping the landscape for insurance, homeowners need to practice prevention and resilience to protect themselves against climate-related disasters.

While it won’t necessarily protect you from an overall price increase, it will give you peace of mind and help keep your insurance premiums manageable.

Climate Change and Insurance : Protecting Your Home for The Future by Surex | zoocasa