Faced with increasingly frequent and costly claims due to climate change, insurers are now offering endorsements or riders to their clients to rebuild their homes in a more resilient way. Beneva is the latest company to launch such an endorsement.
Announced in November, the Rebuild Better endorsement is offered free of charge to current and future Beneva policyholders. It involves sharing the additional costs with the policyholder to replace materials with more resilient options following a disaster. The insurer reimburses these expenses up to a combined maximum of $3,000.
Beneva will cover 50% of the cost of replacing floors, roofs, and exterior siding, up to a maximum of $3,000. Within this combined total, and up to a maximum of $1,000, the insurer will also pay half the cost of installing preventive equipment, such as backwater valves, leak detectors, or catch basins.
This new endorsement is a direct response to the extreme weather events of 2024, which cost Canadian insurers $9.2 billion. At Beneva, water damage accounted for 75% of claims that year, representing $616 million in compensation, according to a press release.
“These trends show that rebuilding in the same way as before is no longer sufficient. We must go beyond this traditional concept of repairing to build a more resilient future. Beneva is committed to supporting its members by sharing costs and offering expertise so that every loss becomes an opportunity to better prepare for climate related challenges,” stated Christian Fournier, Executive Vice-President and Leader, Property and Casualty Insurance, at Beneva in the press release.
Other options for consumers
In addition to Beneva, other insurers offer such riders to their clients, including Wawanesa and Co-operators.
Launched in 2022, Wawanesa’s Stronger Home coverage offers an additional $25,000 in coverage and covers the higher cost of replacing a roof or exterior cladding with more resilient materials after a claim.
Holders of the Eco-Friendly coverage, for their part, benefit from an additional $35,000 in coverage. Appliances damaged during a disaster can be replaced with less energy-intensive ones.
At Co-operators, the TomorrowStrong endorsement has been available free of charge since its launch in June 2024. Policyholders affected by a disaster can receive up to $3,000 to upgrade their roof, up to $1,000 for preventative equipment, and up to $1,500 for the installation of hurricane-resistant straps.
Additionally the insurer’s Enviroguard coverage, offers a 10% increase in the claim amount, up to a maximum of $50,, for replacing damaged property with eco-friendly products, such as Energy Star certified appliances.
In 2024, property damage accounted for 45% of the insurer's claims and benefits. Of this, 37% was attributable to fire, 28% to water, and 19% to wind, hail, or ice.
Finally, for several years now, TD Insurance has offered Enhanced Home Coverage, which includes Eco-Efficient Rebuild coverage. This means it increases compensation amounts by 10% on a covered claim, up to a maximum of $50,000, to cover the additional costs associated with purchasing eco-friendly renovation products or resilient materials.
More information for policyholders
While such endorsements allow insurers to avoid future claims and the subsequent opening of cases, it is essential to ensure that policyholders who use them are also well-informed, Quebec’s Chambre de l’assurance told the Insurance Portal.
“Many policyholders only realize at the time of a claim that their coverage includes or excludes certain elements, or that the amount offered for repairs is capped,” notes Jannick Desforges, Director of Legal Affairs and Regulation for the organization.
The Chambre believes that increasing resilience to climate change is a collective responsibility shared by the public, insurers, and governments, among other stakeholders.
The Chambre adds that policyholders, even before using the endorsement in the event of a claim, can make their property more resilient by replacing materials or installing certain systems. In some cases, these initiatives can also reduce their insurance premiums, explains Desforges.
Other insurers could eventually enter the market for endorsements that promote resilient rebuilding.
Since some regions of the country are at higher risk of experiencing more losses due to climate change, it may prove more economical in the long run for insurers to encourage their clients to rebuild with more resistant materials.
Every dollar invested in resilience can prevent losses that are five to ten times more costly, according to the Insurance Bureau of Canada (IBC).
The need to rebuild better has been identified by the industry as a key element of greater resilience to extreme weather events, the organization noted in an email to the Insurance Portal.
The IBC is also advocating for preventive strengthening of Canada's building stock to better prepare buildings and residences to withstand future climate hazards.
