New report from LowestRates.ca shows condo and home insurance prices rising throughout Canada

TORONTO, Nov. 12, 2020 /CNW/ - Already a significant expense for Canadian house and condo owners, home insurance rates are expected to continue their steady climb, according to the inaugural Home Insurance Price Index report from leading financial comparison site LowestRates.ca.

Prices are rising due to a number of factors. These include the effects of climate change on insurance, as well as a growing number of claims in the condo insurance space. It's going to become increasingly important for consumers to compare their options to avoid the worst of these price increases.

"The industry expects prices are only going to get more expensive as insurance companies deal with rising building costs, increased weather events and more claims," says Justin Thouin, CEO of LowestRates.ca. "However, not all insurers will raise their rates at the same level. While one company may be raising rates by 10%, another may raise rates only 1%. You need to be able to find the ones that are offering better rates in a rising rate environment."

The Home Insurance Price Index draws on data from LowestRates.ca's home insurance quoter, which hundreds of thousands of Canadian use every year to compare real-time rates tailored to them. The report is based on data collected from home insurance shoppers in British Columbia, Alberta and Ontario from Q3-2019 through Q3-2020. The Index was set to 100 for Q3-2019; a one-point change to the Index represents a 1% change from the initial benchmark of 100.

Report highlights:

1. Climate change is a key driver of home insurance prices: Residential property premiums rose over the past year, which experts attribute to escalating real estate prices and the increased frequency and severity of weather events. The trend is likely to continue.
2. COVID-19 hasn't affected premiums the way many feared: Home-based work arrangements triggered by COVID-19 can affect insurance rates for some, but not for others.
3. The cost of condo insurance is soaring in Alberta and B.C.: Causes include a rising number of insurance claims which are being passed on to consumers. Due to rising claims, many buildings are struggling to find adequate insurance that doesn't have outrageously high deductibles.
4. Comparing prices can help you save: Consumers can avoid larger, market-wide price increases by shopping the market for home insurance.

LowestRates.ca Home Insurance Price Index 2020
Average premium change, Q3-2019 to Q3-2020
	B.C.	Alberta	Ontario
Home	6%	1%	-1%
Condo	16%	16%	3%

1.  Why home insurance prices will continue to rise

LowestRates.ca's experts agree that climate change has been a key driver of rising home insurance prices over the past few years. Extreme weather events have become more prevalent due to global warming – a trend expected to continue – and every windstorm, flash flood or hailstorm causes home insurance claims to rise. These growing costs are subsequently reflected in higher insurance prices.

Also, rising real estate prices have pushed up home insurance costs, because premiums generally correlate to the value of the assets being insured. Although the impact of real estate inflation on insurance rates has been less than that of climate change, it still has an effect.

2.  COVID-19 hasn't impacted home insurance rates – yet

Although many Canadians fear that working from home will cause their home insurance costs to rise, LowestRates.ca data shows that hasn't been the case. Our consultations with brokers and insurance companies resulted in feedback that claims haven't increased as a result of more people working from home thus far.

However, time will tell where rates go next. Increased usage of the home might result in more insured losses – thus driving up claims – but those risks could be offset by greater monitoring of homes by the people working in them.

3. Condo insurance rates are soaring in Alberta and B.C.

For many condo owners in B.C. and Alberta, the past year hasn't been kind in terms of insurance rates. In each of those two provinces, the average condo insurance price climbed by 16% between Q3-2019 and Q3-2020.

Skyrocketing deductibles of many condominium buildings are largely to blame. A number of factors are behind this, including the increased cost of building materials, higher frequency of damaging weather events and a lower number of insurance carriers competing for condo insurance business in those provinces.

Ontario's condo owners were relatively lucky over the same time period, seeing only a 3% increase in condo insurance prices. But industry watchers believe rates in that province could spike for the same reasons as in Alberta and B.C. As well, Ontario cities such as Toronto have seen a boom in condos built in the past decade. These condos have been built quickly to keep up with record demand. Brokers we speak to have mentioned that there has been a growth in claims arising from workmanship issues, and part of this may be due to many of these projects working on shorter timelines to meet demand. This is something LowestRates.ca will continue to monitor.

4.  Shopping the market helps Canadians save money on home insurance

As a number of trends push up home insurance prices, it's becoming more important than ever for Canadians to compare prices offered by different insurance companies. Insurance companies do not raise prices uniformly. You have no way of knowing your insurance company is charging 10% more than the average home insurance company without comparing the market.

To read the full report, go to: https://www.lowestrates.ca/blog/homes/home-insurance-price-index-q3-2020

Our methodology
The LowestRates.ca Home Insurance Price Index tracks the quarterly average of home insurance prices quoted on LowestRates.ca. We set the index to 100 in Q3-2019 and use average prices from that quarter to gauge whether prices are moving up or down in relation to it.

About LowestRates.ca
LowestRates.ca is an online rate comparison site for insurance, mortgages, loans and credit card rates in Canada. The free, independent service connects consumers directly with financial institutions and providers from all over North America to offer Canadians a comprehensive list of rates. LowestRates.ca's mission is to help Canadians become more financially literate, and we have saved them over $1 billion in interest and fees.

SOURCE LowestRates.ca

For media inquiries, please contact: Ian Portsmouth, [email protected], 647-641-6033