Home Insurance Rates Across Canada: Here's How Much It Costs to Insure a Home
You might have noticed that you can’t get the same price on lumber or home renovation supplies anymore. Some of the deals you took advantage of on supplies or groceries in the past are no longer present.
In fact, it seems like everything has increased in price.
And the reality is that due to the pandemic, many things have increased in price. But COVID-19 is not the only factor. Inflation, climate change, and supply chain issues have put upward pressure on products and services to meet waves of fluctuating demand.
In 2022, it looks like home insurance premiums will follow suit. Experts predict that home insurance premiums will increase 5% across the course of the year. Some organizations might increase premiums more significantly.1 According to RatesDotCa, the average cost for home insurance in Ontario was $1,284 in 2021.2 The expected 5% increase would mean an additonal $64 per year from the average homeowner in that region. As you can see in Figure 1, there is some discrepancy interprovincially between prices for home insurance.
But why are home insurance premiums rising? And what are the current home insurance rates provincially across Ontario, Alberta, and Manitoba?
Let’s investigate what’s causing the spikes and where you get the most bang for your buck.
Why are home insurance premiums rising in Canada?
There is no ignoring the elephant in the room: COVID-19. While some provinces have varying restrictions and guidelines when it comes to the virus, all regions have been affected by increased frequency of renovations, climate change, and supply chain issues.
According to a report from the Government of Canada, 2021 demonstrated “unprecedented extreme weather, in the form of devastating flooding, widespread wildfires, relentless heatwaves, and powerful tornadoes.”3 There is a clear link between climate change and the increased frequency of these events, thus the government has already committed billions to fight greenhouse gas emissions.
This extreme weather driven by climate change caused millions of dollars in insured damages during 2021, which is putting pressure on insurance premiums across the country. In July 2021, a tornado ripped through Barrie, Ontario, causing more than $100M in insured losses.4 On July 2, 2021, a massive hailstorm battered Calgary, Alberta, dimpling vehicles, and riddling house siding with millions of dents. Total storm losses from 39,000 insurance claims exceeded $555 million.5
Keep in mind, these are just two events. The insurance bureau of Canada estimates the total is over $2B of insured losses over the course of 2021.
Increased weather damages in most provinces will mean increased risk and increased premiums.
More Renovations, More Inflation
With shifting regulations and virus variants, more Canadians have hunkered down and decided to improve their living environment through renovations. Referring to Figure 2, the upward trajectory on home building permits is clear from 2016 to 2021.6
According to Bank of Canada (BoC) Governor Tiff Macklem, “the annual inflation rate could stay 'uncomfortably high' around five percent over the first half of 2022.” This is after noting that the annual pace of inflation climbed to 4.8% in December 2021, a rate that hasn’t been seen in 3 decades.7
Home renovations increase the cost of rebuilding, which can increase insurance premiums. However, the goods and services that power these renovations have also inflated drastically. The combination of these factors is a large reason why Canadians can expect an increase in home insurance premiums.
Supply Chain Issues
The pandemic has caused supply chain disruptions across the board. Tack on the sky-high inflation numbers and changes in purchasing behaviour and you get a tight building material market with increased costs on things like lumber. From 2018 to April 2021, the cost of a rebuild doubled in Canada.8
All these factors drive up home insurance rates.
This is partly because insurance rebuilds are sometimes more expensive than private contracting. Insurance companies are required to rebuild promptly to get homeowners back into their homes and could also be obligated to pay homeowners back for accommodation costs during the rebuild. Inflated cost of materials, the region of your home, and the age of your residence also play a factor.
Average Cost of Home Insurance in Ontario, Alberta, and Manitoba
Provincial boundaries matter almost as much as city lines and risk factors when it comes to home insurance rates. Let’s look at the average cost of insuring a home in three of Canada’s major provincial markets.
Home Insurance Rates: Ontario9
Average home insurance premium: $1,250 per year or around $100 per month
Average condo insurance premium: $345 per year
Many factors impact the cost of home insurance in Ontario including crime rate, weather damage, and claims history. But the city you call home is the most impactful factor.
As the price of your home increases, so does the cost to insure your home. No two real estate markets are the same, which is why it’s best to use a Home Insurance Calculator to estimate the average cost before purchase or upgrade.
Home Insurance Rates: Alberta10
Average home insurance premium: $1,000 per year or around $80 per month
Average condo insurance premium: $500 per year
Alberta has a few more factors to consider than Ontario when assessing home insurance costs. Things like the size and type of your home, weather, and crime risk, all combine to allow insurance brokers to accurately assess the risk. It cannot be boiled down to city-specific averages.
Here are five key factors to evaluate when considering home insurance in Alberta:
- Property Type - Each type will be evaluated differently because they each come with different risks.
- Location – Houses and condos in high crime areas, or near airports or large bodies of water face higher insurance premiums.
- Internal Construction – Increased risk of fire or damaging appliances will cost more to insure.
- Renovations & Betterments - Improving your home or condo can both reduce or increase your costs, depending on the type of renovation you’re doing.
- Past Claims History - Any claim made in the past 10 years will impact your monthly premiums.
The more risks with your property, the higher your Alberta home insurance rates will be. This is why it’s always best to use a Home Insurance Calculator to assess your home’s risk level and premium expectancy.
Home Insurance Rates: Manitoba11
Average home insurance premium: $1,032 per year or around $80 per month
Average condo insurance premium: $500 per year
Like Ontario and Alberta, some homes can yield much cheaper home insurance premiums in Manitoba based on a variety of factors. In addition, condos are significantly cheaper to insure than homes. Manitoba home insurance is impacted by the same factors (see above section) that drive or drop Alberta rates. It’s not so much the city you live in, but the type of property and risk level attached to it that impacts home insurance premiums.
As always, a Home Insurance Calculator is recommended to accurately assess the costs of a specific location.
While home insurance premiums are expected to rise this year, you can prepare by assessing how the increases will affect your overall budget and start factoring in those increases before they take hold.
In shifting markets like these, the guidance provided by a local REALTOR® can’t be overestimated. A FairSquare Group Realty agent will provide you with the latest market data to help you buy or sell at the right price, plus, buyers receive $2,000 cash back* and sellers save thousands in commission! Let us help you reach your real estate goals. Call 1-855-999-9740 to speak to an associate today.
1 Canadian Underwriter - Why Home Insurance Premiums are Rising
2 Rates.ca - Insurance Quotes Canada
3 Canada.ca - Environment and Climate Change Report
4 CTV News - Tornado Damages in Barrie
5 Canada.ca - Top Ten Weather Stories
6 Stats Canada - Value of Building Permits
7 Financial Post - BoC Unclear How Quickly Inflation Will Drop
8 CBC - Lumber Prices COVID-19
9 Ratehub.ca - Average Home Insurance Cost Ontario
10 Ratehub.ca - Home Insurance Cost Alberta
11 Ratehub.ca - Home Insurance Cost Manitoba