Prior to 2008 and for 25 years running home insurance claims averaged approximately $100 million a year. Since 2009, however, home insurance claims have soared to $670 million each year. The cause has been damage caused by extreme weather, and Calgary in particular has endured some extremely rough summers over the past few years. Even before the floods of June 2013 the insurance industry was struggling to keep up with the more than $530 million worth of claims from the tremendous hailstorms that pounded Alberta in 2012. And now that claims from flood damage have been totalled at more than $1.7 billion, companies are being forced to make adjustments to home insurance policies.
Factors in Your Home Insurance
Claims history, the replacement cost of your home, length of property ownership, type of construction material used and mitigating factors taken by the homeowner are few of the factors that will affect the pricing of insurance coverage. Also becoming more and more important is your address and postal code. If your home is located in one of the Government of Alberta’s designated floodways, flood fringes or overland flow zones, then you should expect that your home insurance will reflect that risk come renewal time.
What to Expect
- Risk-Sensitive Pricing: This essentially means that the cost of your insurance will correspond the underwriting risk the insurance takes to protect the property. With risk-sensitive pricing, homes that have been outfitted with flood mitigation measures such as backflow valves, sump pumps with back up power and durable exterior materials that will withstand severe weather will receive a lower premium than homes without.
- Rate Increases: Even if you have never had to make a claim, the overall cost of your insurance may rise anyway. The reason for this is because insurance works on the analogy of “losses of the few paid by many”. Your coverage may remain exactly the same, but you could see an increase in the overall cost of your home insurance.
- Changes to Coverage: Insurance companies may decide to alter certain aspects of your coverage in order to better deal with the weather related claims. Homeowners in Calgary in particular may see introduction of different sub-limits in the property policies for example, companies may choose to have sub-limits for damage due to hail, water, wind hail and sewer back-up.
- Differences in Deductibles: In the renewals you will see different deductibles for losses by different perils, for example higher deductibles for sewer back up, windstorm and hail claims and lower deductibles for fire, theft etc.
Fire was once the main cause of home insurance claims, but the source of most claims in Canada is now water damage. Planning ahead for events like sewer back-ups can greatly reduce your risk of ever having to file a claim.
Home Insurance Renewal: Talk To Your Broker
When you receive your renewal forms, give the knowledgeable brokers at Bow Valley Insurance a call. As insurance brokers we specialize in finding the very best policy to fulfill all of your needs as a homeowner, and we are also able to offer a number of discounts. Apply for a free home insurance quote to get started! We pride ourselves on our service and expertise, and look forward to being able to offer excellent rates and great coverage.