KENORA-RAINY RIVER – For those homes that were hit the hardest by this year’s flood, a little compensation can go a long way in attempting to return to a normal life.
However, according to RATESDOTCA, rising interest rates, historic inflation, a labour shortage and increasing incidences of severe weather have increased home insurance premiums in Ontario since the fall of 2021.
Homeowners in Keewatin have seen an 18 per cent increase due to market vulnerability resulting from the effects of climate change while Fort Frances premiums have gone up four per cent since last year.
RATESDOTCA insurance expert, Tanisha Kishan, believes that the threat of water damage, in particular, explains the most significant premium increases.
“The topography of LaSalle, in the Windsor region, makes it more likely to flood than other Ontario cities. Similarly, Keewatin, near Kenora, has recently been affected by serious flooding,” said Kishan. “As incidents of severe weather increase across the country, flooding is a peril for which more and more insurance providers are adjusting coverage – all the more so in low-lying areas. It has never been more important for Ontario homeowners to have water damage protection – where possible the greatest amount of protection available.”
In Keewatin, the estimated 2022 premium is set at $2,033, which is ranked sixth-highest in the province, while Fort France is the seventh-highest with homeowners paying $2,023 which has gone up four per cent since last year.
Compared to Southern Ontario, the insurance premium has gone up; however, the southern cities such as Ajax ($1,068) and Stratford ($1,071.5) are paying less than the smaller town in Northern Ontario.
One of the major concerns for the price increase is climate change. According to Catastrophe Indices and Quantification Inc, “in 2021, insured damage for severe weather events across Canada reached $2.1 billion. Last year was the sixth highest in insured losses since 1983.”
For those who put in an insurance claim for damages due to the flood, providers are adjusting the cost of insurance to cover the cost of damage. And because the server weather pattern has been occurring more frequently as of late, providers are adjusting insurance premiums more often.
However, climate change isn’t the only factor for the rise in insurance premiums. Economic pressures from ongoing global supply chain issues, historic inflation and labour shortages are driving up replacement costs. In other words, insurance providers account for in their estimates the cost of the materials to rebuild a damaged home, as well as, interest rates also impact home insurance premiums.
Rural communities pay more for insurance because of their location. Insurance providers adjust homes through risk assessment.
According to RATESDOTCA, “Home insurance providers are also paying more attention than ever to the risk of water damage from flooding.”
In 2020, the Federation of Canadian Municipalities and Insurance Bureau of Canada released a report calling on all levels of government to invest in local climate adaptation strategies, especially in areas where the investment is needed most.
According to the report’s findings, avoiding the worst impacts of climate change at the municipal level will cost more than $5 billion each year, shared amongst all three levels of government.
