Weather affecting how Canadians buy insurance

Climate change is a growing issue in Canada and it’s affecting the way Canadians are buying home insurance.

Last year, about $2 billion in damages caused by extreme weather was spent in Canada, a number that is fast becoming the new normal.

According to the Insurance Bureau of Canada (IBC) website, most of it was spent on water damage.

In the past five years, there has a been an increase in homeowners looking to add water damage insurance to their existing plans, said Dave McInnis, president of Peake and McInnis insurance brokerage in Charlottetown.

In the past, fire and wind insurance was the major concern for new homeowners looking to invest in home protection insurance.

“If you’re purchasing house insurance fire insurance is a must,” he said.

“It’s something we all think of, but we don’t always think about water.”

For people living in areas more at risk to extreme weather, it can be more difficult to get these types of insurance, said McInnis.

“There are some places where flood insurance is not available because there is such a high risk of flooding,” said McInnis.

Amanda Dean, vice-president, Atlantic, of the IBC, said prior to 2015, Canadians could not buy flood insurance. Since then, there has been improvement, said Dean.

“Insurers invested in flood maps, models and developed flood insurance products.”

Today, these types of insurance can be purchased as addons, she said.

“It’s very common that a typical home insurance policy would have a limit of $5,000,” said Dean.

“It would be a bit extra, but we always encourage homeowners to have that conversation with their insurance representative annually. They need to buy insurance if they have a mortgage.”

Dean’s advice to homeowners is to talk with their insurance agent to make sure they are getting the coverage needed with the best plan.

“There are many things insurers look at; where the home is located, if it is close to fire halls or if the house is made of brick or wood.”

If the residence is located in an area considered at high risk to extreme weather, it can be more difficult to get coverage, she said.

“If the home is near water we see if the home is eligible,” she said.

These locations would include houses built close to rivers, cliffs or open water, she said.

“If it’s in a too high risk area it would either be cost prohibitive to buy flood insurance or it would just be so high risk it would be beyond the model that insurers are able to offer insurance products for.”

For these reasons, it is important to talk to your insurance representative to make sure you are getting the proper coverage, said Dean.

“Whether it’s a young couple or home owners buying their fifth house, shop around. Find the particular brokers and models that cover the protections you want.” McInnis agrees.

“Go over this stuff, water damage can as devastating as fire damage. For most of us, buying a house is the biggest investment we’ll ever make, so you want to make sure that it is protected.”