One third of homeowners worried about extreme weather damage

If 2023 has taught us anything, it’s that extreme weather induced by climate change is not a thing of the future. It's very much a lived reality for many Canadians. 

For those in the western provinces and Northwest Territories, the impact of this year’s wildfires has been devastating – 15 million hectares of land burnt and nearly 200,000 people displaced. On an economic level, the wildfires in British Columbia alone have cost the insurance industry $720 million in insured losses. 

LowestRates.ca asked homeowners in Ontario if they’ve been impacted by severe climate change-induced extreme weather over the past year and how concerned they are about the safety of their homes. We found that 34% of homeowners are worried about extreme weather events like strong winds, flooding, and wildfires damaging their homes, while 5% have already experienced some damage over the past five years. 

With increased frequency and intensity of extreme weather events, home insurance prices have also increased. Among those surveyed, 66% of homeowners say they did not receive any communication from their insurance provider on policy changes or endorsements. And three per cent say they have received communications but haven’t read or paid heed to it. 

Let’s take a closer look at how extreme weather events are impacting homeowner’s sentiments towards insurance.  

Over one third of homeowners are worried about extreme weather events 

According to LowestRates.ca data, 34% of homeowners are worried about extreme weather events damaging their homes. Most are concerned about strong winds (12%) and five per cent are concerned about flooding. One per cent of Ontario homeowners are concerned about wildfires and hail, respectively. Lastly, 14% are concerned about a combination of these weather events.  

According to Anabela Bonada, manager and research associate at Intact Centre on Climate Adaptation at the University of Waterloo, Canada was impacted by pretty much all the perils this year – including flooding, wildfires, and extreme heat. 

“As a result of global warming, we can expect to see more of these extreme climatic events,” she says. In Toronto and other major cities of Canada, the two most common concerns are flooding and extreme heat.  

Any home in Canada is at the risk of flooding because they’re built on floodplains, explains Bonada. Pavement added to housing areas removes some of the precious natural ecosystems that would have absorbed rain from a weather event like flooding. 

Read more: What is an Act of God? 

For five per cent of homeowners, extreme weather events are a lived reality  

On the other hand, five per cent of homeowners have already experienced extreme weather damage to their homes in the past five years. 

Bonada notes that the United States has home listing websites that include a climate risk rating system that Canada could benefit from replicating. In fact, the insurance industry is currently working with the federal government to develop a rating system that will aid homebuyers in assessing the climate risk to their homes. 

In the absence of such a climate risk rating system, she recommends homebuyers ask the realtor about past climatic events before purchasing. “If you’re looking at coastal properties or cottages, you would want to look at how the climate has impacted these communities in the past,” she says.  

“If there are no protections between your home and the coast, you are at a higher risk of coastal land erosion and your home being flooded.”  

Similarly, before purchasing close to forests or grasslands in northern Ontario, one should assess the impact of previous natural events on local communities. 

The costs to home insurance  

Among those surveyed, 66% homeowners say they did not receive any communication from their insurance providers regarding policy changes or endorsements in relation to the frequency of extreme weather, while 16% say they have received some communication and have reviewed the policy changes. On the other hand, three per cent say they have received policy change information but haven’t read it.  

Increasingly, insurance companies have been sending communications to customers on coverage or endorsements that they can opt for. The overland water insurance endorsement, for example, covers customers for flooding caused by torrential rains, coastal flooding, or tsunamis.  

Standard home insurance policies cover water damage caused by a burst pipe or broken appliance, but not that of overland flooding. 

Stephen Balgobind, a mortgage and insurance agent with Get Init! Financial Group says that home insurance rates have been affected by natural disasters.  

While Canadian insurance companies haven’t taken drastic measures like pulling out of the market, Balgobind has seen an increase in insurance premiums, particularly for those living in areas where extreme climate events have occurred. One resident in B.C. found, for instance, that her home insurance had doubled upon renewal due to this year’s wildfires. 

The Insurance Bureau of Canada (IBC) notes that home insurance prices have increased by 14%, with a five-per cent increase in premiums over the past year.   

Related: Climate change is upending the home insurance industry. And it’s going to cost you. 

In addition to housing affordability, Balgobind says that Canadians are now factoring in the high costs of home insurance in vulnerable areas. “Climate change is certainly dictating where people buy,” he says.  

“While affordability in the Maritimes may be greater, for example, people are also considering the high risks of flooding and rainstorms, and risk of damage to their homes and home insurance prices, further down the line.” 

How can homeowners better prepare for extreme weather risks? 

In a housing market this is currently seeing an affordability crisis and climatic risks, there are fewer options for people who may have purchased a home a few years ago. But as the climate crisis worsens, you can still safeguard your property to mitigate risks. 

As part of her work at Intact Climate Centre, Bonada offers guidance to municipalities, communities, and residents to adapt to climate changes. She recommends homeowners first equip themselves with as much information as possible to determine their risks.  

Here are some suggestions that could mitigate the risks of extreme climate: 

• Strong winds and hail: Fix any broken items like roof shingles or windows.  

• Flooding: Remove debris from storm drains. Check for leaks in plumbing or fixtures. Get a sump pump installed and test it out beforehand.  

• Wildfires: Use fire resistant building materials, like a metal roof or non-combustible siding to safeguard against wildfires. Clean out the home’s eavestroughs to make sure there are no inflammable materials lying around. 

There is a common misconception that home insurance policies cover all types of natural disasters. But that couldn’t be farther from the truth. For protection from floods, for instance, you will need to obtain extra flood coverage.  

Depending on where you live, your risks, and coverage requirements, it’s a good idea to compare home insurance rates.