Ratehub.ca's predictions for 2024: Home insurance edition
Home insurance won't be immune to the effects of inflation in 2024, so make sure you're shopping the market ahead of time – compare personalized quotes from Canada's top providers with us today.
Jessica Ho
2023 marked an interesting year for homeowners across the country, and headlines weren’t just limited to the most recent mortgage rate announcement. Home insurance also emerged as a big topic as Canadians faced ongoing challenges with coverages and costs. Let’s take a look at our predictions for the new year, accompanied by insights from Ratehub.ca’s very own insurance experts.
Key takeaways on home insurance predictions for 2024
- We don't expect home insurance to get any cheaper for most Canadians next year – this is due to various market factors, such as high claims costs and climate change incidents.
- More homeowners may be finding it difficult to obtain proper overage against overland flooding. While the Canadian government does have plans for a national flood program, it isn't expected to launch until the spring of 2025.
- To combat the rise in your home insurance premium, be sure to take matters into your own hands. Comparing quotes from multiple providers is a great way to save as each insurer will rate your property differently based on its risk factors – you won't know which option is the cheapest until you take a look at all of them.
The inflation of home insurance in 2023
Before taking a look at our home insurance trends in the new year, let’s revisit our 2023 insurance predictions article. Here, we warned Canadians about the impact of inflation and their home insurance rate – and sure enough, the cost of coverage didn’t get any cheaper. The table below outlines changes consumers saw in their premiums throughout the year.
Source: All numbers are from the Shelter Consumer Price Index from Statistics Canada – representative of homeowners’ home and mortgage insurance price increases from 2023 when compared to data from 2022.
Home insurance premiums will continue to rise in 2024
Unsurprisingly, we don’t think coverage will get any cheaper for Canadians in 2024. Looking at industry trends from the past, here are some reasons we think the cost of home insurance will only continue to rise in the near future.
High repair and replacement costs
One contributing factor to the rise in home insurance premiums is the high costs of making a home insurance claim. The math is simple – if ongoing inflation causes home repairs and rebuilds to cost insurers more, these companies will need to start charging you (as well as all other customers) more too.
When comparing October 2023 to the previous year, the Shelter Consumer Price Index noted a slight decrease of 1.2% in home rebuild costs, indicating a potential relief from pandemic-related shortages and delays. While this is somewhat of a positive outlook, the cost of home maintenance and repairs still saw an increase of 3.5%.
Morgan Roberts, Director of RH Insurance:
“As the cost of paying out a claim continues to fluctuate, make sure you’re reviewing your home insurance regularly. Most policies have guaranteed replacement value built in – which ensures you’re covered for the full cost of a rebuild – but some older properties may be missing the coverage.”
Climate change and natural disasters
According to the Insurance Bureau of Canada, 2022 marked the third-highest year for insured damage in Canadian history – with damages for the year costing $3.1 billion. And while the bureau has yet to release a nationwide number for 2023, it isn’t expected to get much better. Ontario alone, for instance, faced $340 million in damages due to the summer storms.
Matt Hands, VP of Insurance at Ratehub.ca:
“A large volume of claims can also lead to the inflation of your home insurance premium – even if you're not the one calling up your insurer. Climate change, along with the natural disasters that follow, has hit the insurance industry hard. And providers need to make this money back somewhere, leading to a rise in premiums for everyone.”
To protect yourself from potential disasters, it’s highly recommended that you add flood coverage to your home insurance policy. While many Canadians assume they’re automatically protected, that’s not the case. It’s actually an optional coverage that comes in different forms, such as an overland water endorsement. At the same time, however, some homeowners won’t be able to get coverage for overland flooding due to the risk their property brings. According to Insurance Business Magazine, up to one-tenth of Canadian homes either currently face or will soon face the issue of uninsurability.
Morgan Roberts, Director of RH Insurance:
“If you live in a flood-prone area, it’s possible that insurers will deny you the coverage – or it’ll be expensive to add it to your policy. Homeowners should double-check with their broker to make sure the company they're currently with is offering the protection they need.”
Coverage against wildfires, on the other hand, is usually included in a standard home insurance policy, and homeowners across Canada likely won’t need to worry about the exclusion of fire protection anytime soon. At the same time, however, the large volume of claims will continue to impact the home insurance industry as a whole, causing premiums to rise for all.
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Canada’s plan to combat the rise in premiums
As part of the 2023 spring budget, the Liberal government announced an allocation of $31.4 million over the next three years to go towards creating a national flood insurance program – in an effort to ease away the burdens of uninsurability due to severe weather patterns. The goal is to provide all households with the opportunity to purchase proper flood coverage for an affordable price.
The program would include offering reinsurance – which is essentially coverage for insurance companies, themselves – through a federal Crown corporation and a separate subsidy program for Canadians. But while efforts were announced to begin from 2023 to 2024, it may be a while before homeowners across the country see the full effects of the system as the target date for roll-out is currently set in April 2025.
What can you do to prepare for the rise in premiums?
Unlike auto insurance, home insurance is optional in Canada – unless you have a mortgage on the property. But while the inflation of Canadian home insurance premiums (along with the ongoing effects of inflation itself) can make it tempting to forego coverage on your property completely, it’s never a good idea to do so.
Instead, make sure you’re doing your due diligence in researching the best options on the market. Your home insurance rate isn’t set in stone by a single provider, so you won’t know which one offers the lowest rate until you take a look at all of them. At Ratehub.ca, you can compare personalized home insurance quotes from top providers across the country, all in one instance.
Matt Hands, VP of Insurance at Ratehub.ca:
“No two insurance companies will rate you the same – they may all look at similar pricing factors but weigh them differently in their rating calculations. Some insurers will be more willing to offer favourable insurance rates to you than others. So take some time to compare quotes from multiple insurers to ensure you’re getting the best price for your situation.”
The bottom line
We predict that the cost of home insurance for most Canadians will continue to rise in 2024 – from the high cost of paying out a claim to the ongoing effects of climate change, it doesn’t look like homeowners will be catching too much of a break next year. And while the government does have plans to implement a national flood plan, it may be a while before we see the full effects of the program. So to prepare for the near future, be sure to take matters into your own hands (and shop the market with us).