Why don’t more home insurance companies offer non-smoking discounts?

Isolation. Curfews. Zoom calls. Children running amok all day while virtual school is in session. Dealing with the global coronavirus pandemic is enough to make you want to reach for a cigarette, a joint, or vape pen. Perhaps all three.

Abstaining from lighting up while being cooped up all day long — whether it be in the name of health, finances, or safety (remember exploding vapes?) — takes serious effort. 

So if you’re able to quash the urge during these stressful times, shouldn’t you be recognized for your efforts? Say, in the form of a non-smoking discount from your home insurance company?

After all, smoking indoors is a bad idea. Fires started by smoking indoors is one of the leading causes of house fires. In Ontario, from 2009 to 2018, 27% of fatal fires were ignited by lit cigarettes or pipes, according to the province’s fire marshal. 

You’d think insurance companies would be handing out non-smoking discounts left and right to prevent remote workers from accidentally burning their houses down. But that’s not the case — and it doesn’t look like it’s going to be any time soon.

More concern over widespread damage than isolated losses

Fire is a significant cause of loss for home insurance companies, right up there with the number one cause of home insurance claims: water. But it’s not the key driver of property insurance increases. 

“Widespread damage is the bigger concern rather than isolated losses,” says Elektra Hilton, director of operations for DirectRate.ca. That includes water and weather-related catastrophes, such as forest fires.

Each insurance company bases its discounts on its target market and the historical data it’s accumulated about that market. Some home insurance providers question policyholders about their smoking habits because their data show enough evidence to justify asking. Others might not because the data doesn't show that house fires caused by smoking present a sizable risk to their business. 

“In looking at our carrier suite,” says Hilton, “about 50% offer the non-smoking discount.” 

Not yet enough data for all insurance companies to respond

Claims from misadventures at home, which insurance companies refer to as “accidental damage,” have been on the rise as of late, according to Stefan Tirschler, product and underwriting manager at Square One Insurance in Vancouver.

If working from home truly is here for the long haul, you can bet the insurance industry will adjust accordingly. After all, insurers need enough money coming in to pay claims.  

Historically, though, insurance companies don’t rush to react to major events. The legalization of cannabis in 2018, for instance, raised similar questions about home insurance premiums, but homeowners didn’t see knee-jerk rate changes.

“To our knowledge, most home insurance companies didn’t raise rates because they had no data to justify it,” says Tirschler.

While most of us feel like it’s been dragging on for ages, to insurance companies, the pandemic is still very much a recent event. Looking at data from the past year alone is too narrow a timeframe.

If any home insurance provider makes an immediate and serious change, it may well be an overreaction, Tirschler adds. “The new normal is coming. We should be basing our decisions on what reality will look like after the pandemic is over.”

How long that will take, Tirschler says, is dependent on the size of the insurance company. Larger ones have more exposure and can sometimes accumulate data in-house faster than smaller companies can.

But if you’re still dragging yourself outside to smoke in this frozen hellscape and wondering to yourself “Where’s my discount?”, it might be worth talking to your home insurance provider.