Here’s Why Home Insurance Rates in Ontario Are Going Up This Year
While last year we saw a bit of a reprieve in home insurance rates in Ontario, as we talked about here, it’s expected that for 2022 we’re going to be seeing increases of about 5% on average.
Home insurance rates are tricky to predict according to the Insurance Bureau of Canada (IBC). There are so many constantly changing factors and variables, plus there is not any regulation of home insurance pricing in Canada. (Source: Canadian Underwriter).
There are 3 main reasons for predicted increases in home insurance rates for this year:
- Climate Change
Let’s take a quick look at each of these in turn.
With the pandemic and more people staying home more than usual, we saw a rise in renovations. When a renovation is done on a home, the replacement value of that home goes up thanks to that improvement, which in turn means that the insurance premium rises to reflect that.
Another effect of the pandemic was the soaring building material costs, such as lumber, that made headlines across the country. Supply chain issues were part of the problem, as many supplies and materials simply couldn’t be procured, or were in such short supply that prices had to reflect that. In essence, cost of construction went up dramatically, meaning that insurance companies were faced with these rising costs when processing and dealing with home insurance claims.
It is also important to note that rebuilds surrounding an insurance claim are often more expensive than just a regular rebuild or repair – insurers are on the clock (and are often paying for accommodation costs for the claimant) and must get the homeowner back into their house as quickly as possible, which will add to costs.
3 – Climate Change
Extreme weather events always affect property and home insurance premiums and in 2021 we definitely saw climate related events with disastrous ramifications – in Ontario the tornadoes that ripped through Barrie caused over $100 million in insured losses. IBC reported that across Canada, insured losses from extreme weather events was over $2 billion. .
So with rates expected to rise, it’s more important than ever to ensure that you are getting the best possible rates and that you are taking advantage of all the possible discounts and savings tools. Check out this post for some of our tips for saving on your insurance.
Source referenced for this post:
Why home insurance rates are rising in 2022– Canadian Underwriter