Why home insurance policies are changing
The past few years have revealed increasing trends in severe weather frequency, aging infrastructure, and home development. Changes to your home insurance are in response to these patterns, which are predicted to continue in the future.
Key reasons for increased property claims
More severe weather, more frequently
In the past 50 years, mean precipitation has increased by approximately 12%. Catastrophic weather events used to happen every 50 years; now we experience one every five to seven. What was once exceptional is now becoming the norm.
This comes with a price. Since the 1980s, severe weather-related claims payouts have doubled every five to 10 years. In fact, insured damage from weather events has increased 650% in the past 6 years alone ($158 million in 2006 to $1.19 billion in 2012). In 2013, the year-end insured losses from severe weather events, such as the Southern Alberta and Greater Toronto area floods, came in at $3.2 billion. This is a record high in Canadian history.
Aging infrastructure
These more frequent and intense weather events are putting Canada's aging infrastructure to the test. Many utility systems were designed years before urbanization and climate change. Now, they struggle to handle the load placed upon them.
It doesn't take a severe weather event to put a strain on the system. Regular weather has resulted in thousands of claims for sewer backup and water damage. In 2005, Toronto experienced enough rain to backup sewers and flood basements at a cost of $500 million. In fact, sewer backup damage has doubled in the past 11 years.
To address aging infrastructure, the Government of Canada has committed $53.5 billion to improvements over the next 10 years.
Home design and contents
How we build houses and what we put in them are also causing claims values to increase. The average home is now more than double the size relative to the 1950s. More people are renovating or developing their basements. Once a place for storage, basements today house valuables, such as media equipment, home offices, and wine rooms. Placing those items below ground level can have a significant impact on insurance claim costs. Replacement costs are dramatically higher than ever before. Water damage has surpassed fire as the leading cause of insurance claims, with the Canadian insurance industry paying approximately $1.7 billion annually for damage.
What you can do
With all of the recent attention given to rate increases and coverage changes, your own home insurance has likely been on your mind lately. While these changes are unavoidable, we can provide advice on how to navigate them with greater ease. Right now prevention is key. It is important to not only understand what is causing these changes, but to discover how you can customize your policy to meet your needs and learn ways of minimizing risk.
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How we can help
At BrokerLink, we are committed to helping you find ways to minimize your risk and keep your premiums affordable. We are able to shop the market to find you the best coverage at the best possible price. We can also provide expert advice on additional ways in which you can minimize cost and be covered.
Talk with a BrokerLink broker today to conduct an insurance checkup to ensure your coverage reflects your needs. We're happy to discuss any changes to your personal property insurance, including rate increases, changes to coverage limits and deductibles, and potential discounts.
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