Rebuild costs drive home insurance rates higher

January 19, 2022


Photo credit: Canadian Underwriters

A rush of renovations ,the cost of home building materials and is pushing home insurance costs higher in 2022, according to insurance industry experts.
Spurred by the pandemic, nearly three-quarters of Canadian homeowners did renovations in 2021, with 25 per cent of them spending at least $25,000.
Also, pandemic-induced supply chain disruptions and changes in consumer purchasing behavior have driven up the cost of building materials such as lumber. For example, lumber trading on the NASDAQ jumped 40 per cent from November to December 2021, from $606 per thousand board feet to $949. 
“Each time you renovate or improve a home, it can drive up insurance premiums,” said Tanisha Kishan, a chartered insurance professional with Rates Dot.ca
The average home insurance rate in Ontario is now $1,342 per year, so a 10 per cent increase would add about $134 per year. But wild weather caused by climate change could drive insurance cost through the roof.
The Insurance Bureau of Canada estimates that the industry-wide insured loss of the tornadoes that tore through Barrie, Ontario in July 2021 cost $100 million, while the flooding in British Columbia in November 2021 cost over $450 million, the most expensive severe weather event in the province’s history. 
“Because home insurance pricing is unregulated in Canada, it’s difficult to determine exactly how much home insurance premiums will rise by, but premiums are definitely on the way up,”  Kishan added.