It has been a rough start to the year with natural disasters causing devastation in North America and beyond. Most recently, wildfires in Southern California have left behind heart-wrenching images of destruction. While these events directly affect the people and properties involved, their impact often reaches further than expected right into the Canadian insurance market. As climate disasters become more frequent, homeowners are seeing their insurance rates rise, and in some cases, insurance companies are limiting coverage in high-risk areas.
Why Are Home Insurance Rates Going Up?
Many Canadian homeowners have noticed that their home insurance premiums have increased in recent years. One of the main reasons for this is the rising number of climate-related disasters, which have become more frequent and severe due to climate change. Events like wildfires, hurricanes, floods, and tornadoes cause significant damage, leading insurance companies to increase rates to cover the growing cost of claims.
For example, Canadian Underwriter reported that in the last quarter of 2024, home insurance premiums rose by over 7%, while personal auto insurance rates increased by 11.3%.
Another reason for rising rates is the increased cost of rebuilding after disasters. Inflation has driven up the price of construction materials and labor, making repairs more expensive. Even homes in areas that were once considered low-risk for natural disasters are now seeing higher premiums, as insurers anticipate more climate events in the future.
In extreme cases, some insurance companies are pulling out of high-risk areas altogether, making it harder for homeowners to find coverage.
The Year of Natural Disasters
According to a report by Aon, 2024 was one of the worst years for natural disasters in Canada. The total cost to the insurance industry reached a staggering $8.5 billion, breaking the previous record of $6 billion set in 2016. Globally, the damage was even more extreme, with insurable losses reaching $145 billion far higher than historical averages.
Canada experienced four major disasters during the summer alone, including:
- Wildfires in Jasper
- A destructive hailstorm in Calgary
- Major floods in Ontario and Quebec
Canada used to account for only 2% of global insurable losses, but that number has now doubled to 4%. As a result, even insurance companies themselves are paying more for reinsurance (insurance that protects insurers), with costs rising by about 100%. Unfortunately, these higher costs often get passed down to homeowners through increased premiums.
How to Protect Your Home Against Climate Disasters
While homeowners cannot stop natural disasters from occurring, there are steps they can take to protect their properties and reduce risks.
The University of Waterloo, in partnership with the Intact Centre for Climate Adaptation, provides guidance on making homes more resilient against disasters. Here are some key steps:
Flood Protection
- Install sump pumps and backwater valves to prevent water damages.
- Ensure proper drainage around your home.
- Keep important electrical systems elevated to avoid water damage.
Wildfire Protection
Follow Fire Smart guidelines, which include creating a defensible space around your home by removing flammable vegetation and debris.
- Use fire-resistant building materials.
- Keep gutters and roofs clear of dry leaves and other flammable materials.
- Heat and Storm Protection
- Plant more trees around your home to provide shade and reduce extreme heat effects.
- Use reflective roofing materials to lower indoor temperatures.
- Advocate for better urban planning that includes natural infrastructure like wetlands, which help absorb excess rainwater and reduce flooding.
By taking these measures, homeowners can better protect their properties and reduce the likelihood of severe damage from climate disasters.
How to Save on Your Home Insurance
With home insurance rates on the rise, many homeowners are looking for ways to cut costs without sacrificing coverage. Here are some strategies that can help:
Bundle Your Insurance Policies
If you have home, condo, or tenant insurance, consider getting them from the same provider as your auto insurance. Many companies offer discounts of 10-20% for bundling multiple policies.
Use Telematics and Usage-Based Insurance
Some insurers offer discounts of 10-30% if you use telematics or a usage-based insurance program that monitors your driving habits. Safer drivers can benefit from lower premiums.
Take Advantage of Group Rate Insurance Programs
Some employers or professional groups offer special discounted insurance rates to their members. Let your insurance broker know where you work to see if you qualify for savings of 10-25%.
Seasonal Discounts
If you install winter tires on your vehicle during snowy months, some insurance providers offer discounts of up to 5%.
Home insurance costs in Canada have gone up by 5.28% so far in 2025, increasing faster than the general inflation rate. This is based on a study by MyChoice, a Canadian insurtech company. The main reason for this increase is extreme weather events, even though inflation in Canada dropped to 1.9% in January 2025.
MyChoice used its internal data along with the Shelter Consumer Price Index to track how home insurance prices are changing in different provinces. They also looked at how much more Canadians are paying now compared to ten years ago.
Which Province Has the Highest Home Insurance Costs?
Alberta has seen the biggest year-over-year increase, with home insurance rates rising by 9.07% in 2025. The province experienced $4.1 billion in weather-related damages in 2024, the highest in Canada. Other provinces with big increases include:
- Manitoba: 6.67%
- British Columbia: 5.89%
- Ontario: 5.45%
Compared to 2015, homeowners in Alberta are now paying an average of $660 more per year for home insurance. The increase is about $592 in British Columbia, $551 in Saskatchewan, and $519 in Ontario. Across Canada, the average homeowner is now paying $421 more annually than they did ten years ago.
How Climate Change Affects Home Insurance Rates
One of the main reasons home insurance costs keep rising is climate change. Natural disasters, such as wildfires, floods, and storms, are happening more often and causing more damage.
In 2024, weather-related losses in Canada reached a record $8.5 billion, making it the most expensive year for disasters in the country’s history. Some of the biggest events included:
- Jasper wildfires – caused $1.1 billion in damages
- Ontario flash floods (July 2024) – led to $990 million in insured losses
Canada vs. Global Insurance Trends
Canada is not the only country dealing with rising insurance costs due to climate change. In California, insurers are reducing coverage in areas at high risk for disasters. After wildfires in Los Angeles in January 2025, some large insurance companies stopped offering new policies in these high-risk regions.
California’s last-resort insurance provider, the FAIR Plan, reported a $1 billion shortfall in covering wildfire claims. To manage this, regulators forced private insurers to cover half the cost, while homeowners had to pay the rest through a one-time fee. This shows how government intervention can be necessary when disasters become more common.
MyChoice CEO Aren Mirzaian commented, “As climate patterns grow more unpredictable, Canada isn’t immune. We’ve already seen insurers pull back in high-risk areas. We need strong insurers and proactive government support – otherwise, coverage will become less affordable or less available in disaster-prone regions.”
How Natural Disasters Affect Home Insurance Rates
- Higher Premiums – Insurance companies charge more because of the increased risk of damage.
- More Restrictions – Some insurers may refuse to cover high-risk areas or add limitations to policies.
- Increased Payouts – Companies are paying out more due to the growing number of claims, which also pushes costs higher.
What Homeowners Can Do to Reduce Insurance Costs
- Make home improvements: Investing in disaster-resistant upgrades, such as fireproof roofing or better drainage systems, can help lower insurance costs.
- Stay informed: Know the specific risks in your area and prepare accordingly.
- Reassess your coverage: Regularly review your home insurance policy to ensure you have the right balance between affordability and protection.
- Find the right balance: Don’t just go for the cheapest option; ensure you have enough coverage to protect your home in case of disaster.
The Role of Government in Keeping Insurance Affordable
Governments can take steps to help control rising home insurance costs, such as:
- Restricting development in flood-prone areas: Preventing construction in high-risk zones can reduce future damages.
- Improving drainage systems: Better urban planning can help prevent costly flood damage.
- Building flood-control measures: Investing in infrastructure like dams and levees can protect communities from disasters.
Conclusion
Home insurance rates in Canada are increasing due to the rising number of extreme weather events. Climate change is making disasters like wildfires and floods more frequent, leading to higher premiums and stricter insurance policies. Homeowners can take steps to lower their costs, but government support is also necessary to keep coverage affordable. Staying informed and prepared is key to protecting your home and finances in an era of changing climate risks.