Rising worries: Nearly half of homeowners fear extreme weather damage

In recent years, climate change has dramatically increased the frequency and severity of extreme weather events, creating significant challenges for homeowners and the insurance industry. 

The summer of 2024 saw hailstorms in Calgary, floods in Toronto and Montreal, and wildfires in Jasper, which evacuated more than 20,000 people from their homes around Jasper National Park and the Municipality of Jasper.  

The damage from those events added up to $7.7 billion in losses, making the summer the most damaging season ever for insured losses from severe weather, according to the Insurance Bureau of Canada.  

These events have not gone unnoticed by homeowners in even lower risk areas. Last year, a survey by LowestRates.ca showed that 34% of Ontario homeowners surveyed were concerned about extreme weather damage to their homes. In 2024, this number has increased to 45%. 

Our latest survey also showed that 13% of homeowners surveyed have taken out additional endorsements to protect their homes from changing weather patterns as damage reports surge. 

How is climate change impacting home insurance? 

IBC estimates that storms and wildfires this year were ten times more than the average annual losses of $701 million between 2001 and 2010. 

“I believe it needs to be understood nationally that climate change is irreversible, period,” says Blair Feltmate, head of the Intact Centre on Climate Adaptation, University of Waterloo. 

The years between 2020 to 2023 were ranked among the top ten worst for catastrophic claims, only topped by major historical events like the 2016 Fort McMurray fires and the 1998 Quebec ice storm, a StatsCan report states.  

The Alberta wildfires of 2023 alone led to nearly $1 billion in insured losses, affecting an area ten times larger than the five-year average. 

“Climate change is here to stay,” says Feltmate. “We're not going backwards on climate change. And as a result of a changing climate, extreme weather is going to get more extreme going forward.” 

With weather patterns worsening, Ontario homeowners are becoming increasingly worried about the risk to their homes. Our 2024 survey shows that flooding is the primary concern, with 9% of homeowners responding feeling worried about flooding – up from 5% last year.  

This year, seven per cent of homeowners responded to feeling worried about wind damage, and an additional 28% are worried about a combination of different weather events including wind and floods. 

Related: Can your home become uninsurable due to climate risk? 

Are home insurance premiums still rising? 

In the past year, Stewart says that home insurance rates have risen between 5% and 15%, depending on where you are in the country, due to the growing frequency of extreme weather events.  

This spike reflects the increasing financial strain on insurers dealing with more climate-related disasters that lead to bigger claims. 

“We would expect that insurance premiums will rise over the next year given the events we’ve just witnessed,” says Craig Stewart, IBC’s vice president of climate change and federal issues.  

In addition to the damage itself, the other two main factors impacting home insurance rates are ongoing inflation and high claim costs.  

Although inflation has already reached 2% in August, the costs associated with claims, repairs, and replacements continue to cause significant challenges. 

To keep insurance affordable for homeowners in the face of ever-worsening weather-related damage, insurance companies are adjusting policies to better handle higher local risks.  

This might mean allowing higher deductibles and lower coverage limits for customers, and making certain types of coverage optional, says Stewart. These changes help make sure insurance stays available, despite the financial challenges from climate change. 

In some cases, insurers may offer reduced coverage in risky areas but provide discounts to those who take preventive measures, like clearing brush away from homes in wildfire zones. 

Higher costs and less coverage for insured homeowners may eventually lead people to rethink their insurance plans and how they manage risks – but most haven’t reached that point yet.  

Majority of Canadians unaware of policy updates 

Home insurance coverage is changing to adapt to the new realities and costs of weather-related damage.  

For example, flooding is the most common extreme weather event in the country. Many insurance companies now offer coverage for flooding from storms.  

Despite broader coverage, the LowestRates.ca survey found that only 9% of respondents took out one endorsement to protect them from climate-related damage, and 4% took out more than one endorsement.   

“People's sense of awareness and sensitivity to the threat of climate change and extreme weather is very much influenced by their experience,” says Feltmate.  

This often leads homeowners to underestimate their vulnerability and neglect to seek extra endorsements for better protection. 

 But others simply can’t opt for more protection. Many insurers are reluctant to offer coverage in areas that are deemed at high-risk for floods due to the high cost of claims from frequent and severe flooding.  

And even when coverage is available, premiums are often too expensive, leaving many Canadians without good options for flood protection.  

“We're seeing the protection gap increase as insurers begin to whittle down the products and leave high-risk areas where it's impossible to earn a profit,” Stewart explains. 

Read more: As the climate changes, check these home insurance blind spots 

It could always happen to you

Despite the growing risks and severity of extreme weather, nearly 90% of homeowners in our survey reported no damage from such events in the past five years.  

But both Feltmate and Stewart fear complacency in homeowners - just because it hasn’t happened to you, doesn’t mean that it won’t.  

“A lack of education and awareness are the biggest problems,” Stewart says. “[People] just don’t think it’s going to happen to them even when they see communities nearby flood or have windstorms.”   

But he also admits that the insurance industry needs to do more to educate consumers on the risks they face. 

According to our survey, 72% of homeowners say their insurers haven’t communicated any information about endorsements or policy changes in relation to extreme weather, and only 34% are confident in their coverage against extreme weather damage.

However, 19% of respondents reported not feeling confident that their home insurance policy provides adequate coverage against inclement weather.   

 “I think that the insurance industry acknowledges that there's more that they can do to keep consumers up to date on the risk that they face,” says Stewart, adding that insurance providers and brokers are continuing to find solutions to engage and inform customers.  

 “The reality is most homeowners don't want to sit through an hour-long call with their insurance broker. It's a pretty boring conversation,” he adds.   

 But it’s those kinds of conversations, Stewart notes, that help Canadian homeowners understand their insurance better and make sure they are covered for weather-related damages, especially as extreme weather events become more frequent. 

Feltmate also highlights the need to increase public access to accurate information, so that homeowners become more aware and educated about the risks of intensifying weather-related events.  

With two in 10 Canadian homes being at risk of flooding, he says “we need to update and make flood risk maps widely available in Canada. Currently, these maps are often 20 to 25 years outdated." 

One important initiative that Public Safety Canada is developing, says Feltmate, is the creation of a Flood Risk Portal to help Canadians have better access to flood risk information. This portal will give homeowners a flood score from one to ten, making it easier for them to understand their property's flood risk level.  

Additionally, homeowners can access practical steps and resources to reduce flooding and wildfire risks through Canada’s national FireSmart program. This initiative involves collaboration between various levels of government and organizations to provide education and resources for wildfire protection and resilience, which Feltmate says more homeowners need to use and rely on. 

“People aren't taking protective measures against flooding simply because they don't know what to do," he explains. 

Read next: 32% of Canadians unaware their standard home insurance policy lacks flood protection: survey 

Preparing for the future  

The National Adaptation Strategy, introduced in 2023, marks a shift towards proactive planning and coordination across all government levels, aiming for 50% of Canadians to prepare for climate risks affecting their homes by 2025.   

Feltmate acknowledges the strategy's potential but says more action is needed.  

“This responsibility extends beyond the federal government to provincial, municipal governments, industry, NGOs, and individual homeowners,” Feltmate states. “The issue is the lack of a coordinated strategy and aggressive mobilization.” 

By embracing a collaborative approach, all stakeholders, including homeowners, can create a strong system that keeps homes safe and provides financial security. 

This has led to efforts between IBC and the Government of Canada to create a national flood insurance program, which aims to provide affordable coverage to households in high-risk zones.  

The program, set to launch in 2025, is meant to offer a financial safety net and address the gap in insurance availability, reflecting a broader plan for flood resilience across the country.  

"The reality is governments, insurers and realtors all need to collaborate and do a much better job of letting people know what risks they face. And homeowners need to take responsibility themselves,” says Stewart.