Home insurance rates are expected to continue their steady climb, according to the inaugural Home Insurance Price Index report published Nov. 12 by LowestRates.ca.
Rising building costs, increased weather events and more claims are all causing insurance to get more expensive, a trend that experts say is likely to continue.
Based on data collected from home insurance shoppers in British Columbia, Alberta and Ontario, the report says climate change is a key driver of home insurance prices. It adds that COVID-19 hasn’t affected premiums the way many have feared – yet. It also warns that condo owners in Ontario who have thus far been spared the double digit increases witnessed in Alberta and British Columbia, could also see similar increases in the future.
The cost of condo insurance in particular is soaring in Alberta and British Columbia. Although the LowestRates price index shows that home insurance premiums have increased by six per cent in British Columbia, one per cent in Alberta, and have actually fallen one per cent in Ontario, condo insurance premiums, however, tell a very different story: In British Columbia, condo insurance premiums jumped 16 per cent between the third quarter in 2019 and the third quarter in 2020. Alberta condo insurance premiums jumped by the same amount, while Ontario condo insurance premiums jumped by only three per cent during the year.
Experts, however, warn that the growing costs could also be realized in Ontario and across the country going forward. Skyrocketing deductibles, the increased cost of building materials, higher frequency of damaging weather and a lower number of insurance carriers competing for condo insurance business are all factors which could cause premiums to spike in the future, they say. “As well, Ontario cities such as Toronto have seen a boom in condos built in the past decade,” they add. “These condos have been built quickly to keep up with record demand. Brokers we spoke with have mentioned that here has been a growth in claims arising from workmanship issues.”
COVID-19, meanwhile, has not impacted premiums the way many had feared. That said, experts say it is still early to be determining the pandemic’s impact on rates. Although working from home might mean more damage to homes due to increased use, and therefore more claims filed, it could also mean less damage to homes due to increased monitoring.
“Condo insurance premiums in British Columbia and Alberta have increased substantially between Q3 2019 and Q3 2020. This can be attributed to strata building deductibles increasing by astronomical amounts due to the frequency and severity of claims, driven by severe weather events and rising rebuilding costs. While this problem is currently isolated to British Columbia and Alberta, many experts expect this to become a national issue.”
