Climate change means more damage and higher insurance rates

Smoky wildfire in a forest leading to higher insurance rates Photo by EsRem/Shutterstock

Your insurance rates may be going up. With the more extreme storms that come with our changing climate, our cottages are suffering more damage. Insurance companies are responding to increased claims by raising rates, deductibles, or both.

They used to be called 100-year storms, or 500-year flooding, or once-in-a-lifetime weather events. These days, however, extreme weather, whether torrential rains, rampaging wildfires, or wild winds, are making the extraordinary, well, ordinary.

So ordinary, in fact, that insurance companies have experienced a roughly four-fold increase in claims in the past eight years, from about $500 million a year to close to $2 billion. And the insurance industry is placing the blame squarely on the impacts of climate change.

Furthermore, last March, the world’s largest reinsurance company, a German firm called Munich Re, warned that the increasingly prohibitive cost of premiums could become a social issue as the climate crisis increases the risk of damage, making insurance unaffordable for people in the most vulnerable parts of the world.

We’re not there yet in Canada, but there’s evidence that insurance is becoming more expensive.

“Our consumer information centre, which is available to consumers to answer any insurance questions, has seen an increase in the number of calls and inquiries from people who’ve seen increases in their insurance premiums,” says Pete Karageorgos, the director of consumer and industry relations for Ontario with the Insurance Bureau of Canada. “So anecdotally that increase is there.”

Even those who haven’t personally experienced damage from extreme weather events might blanch at the cost of their new premiums. “Insurance companies set their rates going forward by looking backwards,” says Karageorgos. “[They’re] going to look at last year and the year before and say, ‘What’s the trend? How much are we paying out with regards to severe weather and how are we going to now pass that along to consumers.’”

This isn’t to say that cottagers are powerless to negotiate rates, he says. Step one is to sit down with your agent or broker. Look at available discounts. See whether prices have gone up because your coverage has gone up and revisit exactly what you need.

New studies say solutions to the impacts of climate change at the lake already exist in nature

It’s also a good idea to work with your lake association or cottage community to put mitigation strategies in place so that you’re less likely to have to make a claim. Consider FireSmart, a program which includes information for individuals and communities on how to prepare for a fire event. Or look for ways to prevent or reduce damage from flooding, including preserving or restoring natural shorelines, checking dock moorings, and reviewing what you’re storing in a boathouse.

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