Severe weather conditions cost Canada $8.5B in 2024: What does it mean for insurance?
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A new report from the Insurance Bureau of Canada (IBC) reveals that 2024 set a record high in Canadian history for severe weather-related damage, with losses totalling an astonishing $8.5 billion.
These insured losses are nearly three times the amount from the previous year and 12 times the annual average from 2001 to 2010.
The release of this report coincides with the wildfire tragedy in California, emphasizing the catastrophic toll severe weather can take. As Canadians observe the devastation of the California wildfires, we may wonder what extreme weather conditions mean for our insurance.
Reflecting on 2024 as Canada’s priciest year for insurance losses, it’s clear that severe weather conditions are not just natural phenomena, but financial crises with long-term ramifications. The consequences are predicted to affect insurance affordability and availability.
Key takeaways on severe weather and insurance
- 2024 was Canada’s most expensive year for severe weather-related insured losses - totalling over $8 billion
- Canada continues to include protection from wildfires in standard comprehensive home insurance policies.
- Insurance premiums are predicted to rise along with tighter restrictions on coverage options.
- Canadians are encouraged to protect themselves from severe weather damage sooner rather than later.
2024: Canada’s worst year for severe weather-related insured losses
According to the IBC, the summer of 2024 was the most destructive season in Canadian history. In just two months, Canadian insurers received 50% more claims than they typically receive in a year.
July and August alone resulted in over $7 billion in insured losses from four weather events, including the flooding in both Southern Ontario and Quebec, the wildfire in Jasper, and the hailstorm in Calgary.
Worried about fire insurance? Here’s what you should know
As the wildfires in California continue to make headlines, many Canadians may wonder if their home insurance covers fire.
The good news is that fire insurance remains a standard component of most home insurance policies in Canada, including coverage for wildfires. Depending on your plan, your policy could offer coverage for property repair or rebuild, additional living expenses, and the loss of your belongings through contents insurance.
Like California, Canadian provinces and cities are subject to a wildfire season. However, insurers are prepared to manage these risks and we do not anticipate policy changes to standard insurance coverage at this time.
To ensure you are protected, regularly review your policy details and confirm your payments are up-to-date.
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What coverage options are available for severe weather conditions in Canada?
Canadians have several home insurance options to protect against extreme weather events also referred to as perils), including:
- Fire and smoke
- Wind and hail
- Floods
- Earthquakes
- Lightning
Some coverages like earthquake insurance and flood insurance are not included in your standard home insurance policy. They will require the addition of endorsements such as sewer backup and overland water coverage.
Other perils coverage such as wind and hail damage are included conditionally. For instance, cosmetic damage to your roof may not be covered if it is still functional.
For those living in communities at risk for wildfires or floods, additional comprehensive coverage for home and auto may be available to address specific needs. It’s best to review your policy needs with your insurance broker or agent to make sure you’re fully protected.
Revisiting Predictions: What severe weather means for policyholders
Each year our experts roll out annual insurance predictions for the year ahead. Here’s what we’re expecting to see in 2025:
1. Higher premiums
"The fallout from another year of significant losses as a result of severe weather events will likely appear in the pricing for home insurance. It won’t be uncommon for Canadians to see higher renewal pricing this year.” - Morgan Roberts, VP of RH Insurance Brokerage
As severe weather conditions like flooding, wildfires, and hailstorms continue to rampage across Canadian cities, the risk to insure increases and is expected to hit policyholders with higher home insurance premiums.
“Over time, insurance prices have risen for Canadians, with severe weather one of the major drivers.” - Matt Hands, vice-president of insurance for Ratehub.ca.
2. Tighter restrictions on coverage
“While we don’t anticipate any major policy changes or coverage limitations in 2025, it is important to remember that the insurance industry is analyzing how to best move forward with the increased frequency of catastrophic losses.” - Morgan Roberts, VP of RH Insurance Brokerage
As we’ve seen with flooding in Canada, high-risk homeowners are experiencing difficulty finding affordable coverage, some being denied altogether.
Fire insurance however is part of standard home insurance policies and we do not anticipate Canadian insurers to follow California’s restriction on coverage this year. Still, Canadians are encouraged to stay updated with the details of their policies when renewing.
“Canada is clearly becoming a riskier place to live, work and insure. As insurers price for risk, this increased risk is now impacting insurance affordability and availability,” - Craig Stewart, Vice-President, Climate Change and Federal Issues, IBC.
How can Canadians prepare for the new normal amid severe weather season?
1. Renew and upgrade policies
Start by reviewing your insurance policies to understand exclusions and consider upgrading coverage to include risks like floods.
Don't delay your policy renewal to avoid gaps in protection, as insurers may restrict new policies or coverage additions during periods of immediate danger, like during wildfire season.
If rising costs are a concern, remember to shop the market and compare home insurance quotes to give yourself the best chance at finding your lowest rate each year.
2. Invest in home upgrades
It’s always best to be prepared. Invest in upgrades to your home that will increase your protection and decrease your monthly rates. For instance, purchasing sump pumps, storm shutters, or even fire-resistant roofing materials are all practical investments that will keep your home safe from severe weather conditions.
3. Review auto insurance policies
Beyond your home, review your auto insurance policy to see what you’re covered for. Note that you will be required to have comprehensive coverage on your policy to be covered for severe weather damage, including fire, hail, and floods. In most provinces, this type of coverage is optional, however recommended especially in high-risk areas.
Quick tip: Just like with home insurance, it’s recommended to shop and compare auto insurance quotes in order to find your best rate.
4. Stay updated with government programs
In March 2023 the Government of Canada announced they would be instituting a National Flood Insurance Program, allowing all Canadian homeowners to purchase affordable flood insurance. The government will subsidize premiums for high-risk populations, relieving homeowners of higher-than-normal rates. The program is expected to launch in the Spring of this year.
We encourage you to stay informed and updated with government plans that may impact your insurance rates.
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The bottom line
Severe weather in Canada has cost billions of dollars in insurance losses. The consequences trickle down to policyholders who will experience a hike in insurance premiums.
To protect your home from severe weather conditions, regularly review your policy to ensure it provides the type of coverage you need. In addition, consider shopping for competitive insurance rates when renewing your policy to keep costs low.
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Alyssa Prizzon, Content Marketing Strategist
Alyssa Prizzon is a content marketer with 5+ years of experience crafting search-optimized blogs and articles across diverse industries, including finance, technology, and more.