How Climate Change May be Affecting Your Home Insurance Premiums
According to a 2019 report from Environment and Climate Change Canada, Canada is warming up twice as fast as the rest of the world.
This means we can expect more frequent and severe weather events in the very near future, such as flooding, snowstorms, wildfires, earthquakes and hailstorms.
In fact, we are already seeing more of these events. Recent instances include the wildfire that destroyed the village of Lytton, BC, in 2021, and the hailstorm that ripped through Calgary and Airdrie in 2020.
If you live in an area where an extreme weather event has occurred, or is at a greater risk for these events, you could see your home insurance, condo or tenant insurance premiums go up.
Why Climate Change Affects Your Rates
Insurance rates are calculated by looking at risk factors and the potential for a claim. This includes — but is not limited to — your demographics, the claim and crime rate of your neighbourhood, your insurance history and proximity to water.
When an extreme weather event occurs, insurers take note — especially when there is an influx of claims. So, if you’re living in an area that has seen a rise in claims or a major claim event, your insurance premiums will very likely increase whether you have submitted a claim or not.
While not all extreme weather damage can be avoided, there are a few steps you can take to reduce your risk and avoid further damage. These include:
1. Working with a broker.
A broker can help you understand the coverage you need for your area and property, as well as clarify coverage limits and replacement values. It is important to proactively work with an insurance broker so that you do not find yourself underinsured.
2. Being aware of risks in your area.
Taking into account the risk factors of your area can you help you take appropriate steps to reduce your risk of damage. This could mean investing in the weather-resistant roofing and siding, upgrading doors and windows, or removing weak branches or trees close to your home.
Keeping an eye on weather alerts can also help prevent damage, such as clearing your gutters of debris or making sure your downspouts are pointed down when the forecast calls for rain.
3. Preventing further damage if an extreme weather event occurs.
If your property is damaged, stopping further damage from happening is crucial. This is especially important after a major weather event, as contractors may be overwhelmed with requests to repair damage and repairs may take longer. Preventing further damage could include:
- boarding up broken or chipped windows;
- moving your belongings if water has entered your home;
- covering damage on your roof or siding with tarps;
- using fans to dry out spaces that are wet; and,
- removing water damaged items.
If you are purchasing products or services to prevent further damage, be sure to keep your receipts for the claims process.
Remember to practice caution when entering your property and cleaning up debris, as the structural integrity of the building may have been compromised. If you have been evacuated, only return home when local authorities deem it safe.
Is it Possible to Lower Your Rates?
You might not be able to avoid insurance premium increases due to extreme weather, but there are still a few steps you can take that could help lower your rates, such as:
- increasing your deductible;
- installing risk mitigation devices, such as home alarm systems or sump pumps;
- bundling your insurance policies;
- reviewing your coverage annually;
- updating aging roofing, plumbing, electrical or heating systems; and,
- working with a broker to shop around for coverage. Remember, the cheapest insurance might not always offer you the coverage you need.
Talk to one of our brokers today to see how you can protect your home, condo or rental.
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