Why Home Insurance Increases Every Year in Canada

Home insurance premiums increase are influenced by a wide range of factors.

Why Home Insurance Increases Every Year in Canada?

Home insurance premiums in Canada often increase every year due to a combination of individual, regional, and industry-wide factors. Below is a comprehensive breakdown of why home insurance rates go up, along with a list of contributing factors, and strategies to reduce your premium:

🏠 Why Home Insurance Increases Every Year in Canada

1. Inflation and Rising Construction Costs

• Labour and material costs increase annually.

• Higher costs to rebuild a home mean insurers need to adjust premiums to reflect accurate replacement value.

2. Increased Frequency and Severity of Natural Disasters

• Wildfires, floods, storms, earthquake, and extreme weather events are on the rise both locally and globally.

• These increase the number and cost of claims, particularly in affected provinces (e.g., B.C., Alberta, Ontario).

3. Claim History

• If you have made one or more claims, insurers may increase your premium or apply surcharges.

4. Rising Reinsurance Costs

• Insurance companies buy reinsurance to protect themselves. When global disasters increase, reinsurers charge more — costs passed on to you.

6. Location-Based Risk

• Certain neighbourhoods become higher-risk due to increased crime, aging infrastructure, or flood risk zones.

• A high claim rate in your geographic area may also have an indirect impact on your renewal premium.

7. Government Regulations & Tariffs

• Changes in provincial insurance regulations or tariffs on construction materials can drive up costs.

8. Coverage Enhancements

• Insurance companies automatically increase your personal contents coverage slightly to ensure it keeps pace with inflation.

9. Market Pricing Adjustment

• The insurance company may have initially underpriced the policy—particularly in the first year—making the renewal appear to be a substantial increase, when in fact the updated premium is still below the average market rate.

See blog about "List of Factors That Affect Home Insurance Premiums"

💸 How to Reduce Your Home Insurance Premium

✅ 1. Increase Your Deductible

• Raising your deductible from $1,000 to $2,500 can lower your premium.

✅ 2. Bundle with Auto Insurance (Except for BC)

• Most insurers outside of B.C. offer discounts of 5–20% if you bundle home and auto policies.

✅ 3. Stay Claims-Free

• Avoid filing small claims. Long claims-free history often results in loyalty or claims-free discounts.

✅ 4. Install Safety Devices

• Monitored alarm systems, tank-less hot water tank, and water leak sensors can lower risk and potentially reduce premiums.

✅ 5. Working With A Broker

• Consider working with a trusted broker to compare quotes from multiple insurers each year.

✅ 6. Maintain Good Credit (Where Allowed)

• In BC and other provinces where credit scores are considered, a good credit rating can lower your premium.

✅ 7. Avoid Policy Gaps or Cancellations

• A history of non-payment cancellations can lead to higher rates or reduced insurability.

• Continuous insurance history can help reduce your premium.

✅ 8. Review and Adjust Coverage

• Make sure you're not over-insured or paying for coverage you don’t need (e.g., jewelry you no longer own or an excessive amount of strata deductible coverage you no longer require).

In Summary:

Due to the various factors that influence home insurance renewal premiums, it’s recommended to work with a trusted broker to review your current policy, make adjustments accordingly, or even obtain new quotes to potentially find a more competitive rate for you.