How Much Is Home Insurance?

The cost of home insurance is rising.

And since I’ve typed this, the cost has surely gone up again.

As mortgage rates seem destined to come down again over the next six months, the cost to insure your property will go up.

However, insurance premiums aren’t rising for the reasons you might suspect…


I often wonder how much it costs to ensure one of those Hollywood-celebrity-owned beach houses on the shores of Malibu.

Surely the inherent risks of owning property only feet from the ocean is clear to the insurance companies!

Or how about owning property that is actually below sea level, like in New Orleans, where houses were destroyed by Katrina not too long ago?

Luckily, we don’t have to worry about how these natural disasters and other anomalies will affect our premiums, because surely what goes on elsewhere can’t affect us.

Or can it?

This past Fall, eleven separate tornadoes ripped through sections of Southern England. 

The first two hurricanes of the Atlantic season were both Category Five.

And for the first time in history, two hurricanes reached land on the same day in Mexico.

The intensity of weather related evens is already sabotaging our ability to economically cover insured losses.

So who is going to take the brunt of these losses?  If you assume it’s the insurance companies, you are sadly mistaken!

Lloyd’s of London, which is the oldest insurance maker in the world, was recently quoted as saying, “Science can only point towards the measures we need to take but it seems clear that the insurance industry should start to prepare now for more severe and more frequent losses as a result of climate change in the middle of the century.”

So are premiums all over the world going to increase because of our pre-disposition to have property damage in natural disasters?

The Insurance Bureau of Canada doesn’t think so.

James Geuzebroek at IBC says, “There is a common misconception that events that happen elsewhere, like Hurricane Katrina, wil have a significant impact on Canadian policy-holders, but that isn’t true.  Natural disasters account for a minor component of home insurance premiums.”

But he goes on to add, “The long-term trend is for more extreme weather.  In fact, insured payouts from natural disasters have doubled every five to ten years since the 1950’s.”

That seems pretty contradictory to me!

If insurance companies are aware of the more extreme weather expectations in the future, and more than just aware of how high their losses are, then why would they bother to distinguish between the more and less prone areas to natural disasters?

If insurance companies are losing money, why not increase all premiums?

Insured losses from the winter of 2007 in British Columbia are estimated at $135 Million.

The early June storm that hit Calgary is now expected to cost insurers $42 Million in claims.

Call me naive, but I think insurance companies will do anything to make their money back.  And that includes increasing premiums in non-risk areas.

Just as property taxes increase every year, so too will your insurance premiums.

The public has been long aware of how insurance companies screw their policyholders, whether it’s health claims, wrongful death claims, property damage claims, or theft.

But as the cost of home insurance continues to rise, I hope policyholders will “shop around” a little more before simply renewing their policies.

A friend of mine surmised that since he lives in a condominium, and insurance is included in his monthly maintenance fees, that somehow he doesn’t need to worry.

Well, since maintenance fees increase every couple of years, surely they are a function of the condominium corporation’s expenses…..such as insurance premiums!

Even condominium owners are affected.

The only difference is, we can’t shop around…

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  1. […] How Much Is Home Insurance? | Toronto Real Estate Property … – the preceding commentary is the opinion of david fleming and does not represent the interests or opinions of bosley real estate ltd., brokerage or the toronto real estate board. […]