As weather-related disasters mount, some Canadian homeowners can’t get insurance coverage

After a period of heavy rain last May, Humberto Pinochet watched helplessly as floodwater rushed into his artist’s studio and home in Baie-Saint-Paul, Que.

“I could see the level of the water go higher and higher,” Pinochet recalled.

His home ended up being a complete loss and was demolished last fall.

Floods like the one in Baie-Saint-Paul, about 90 kilometres northeast of Quebec City, helped drive up insurance claims from extreme weather in 2023 to the fourth-highest total on record, according to a new report by the Insurance Bureau of Canada.

Extreme weather makes Canadian homes harder, more expensive to insure

Climate change has made extreme weather more common in Canada. And the accompanying disasters such as floods and fires have made home insurance more expensive — if you can get it all.

In total, insured losses from extreme weather events exceeded $3 billion in Canada for the second straight year.

The report underscores concerns about the growing economic cost of weather-related disasters made more frequent and severe by climate change — and the rising cost of insurance coverage for homeowners.

In some cases, homeowners are struggling to get coverage at all.

B.C. wildfires top list

According to the report, the wildfires in Shuswap and Okanagan, B.C., were far and away the costliest source of insurance claims.

But a mix of storms, flooding and fires across the country contributed to what amounted to the fourth priciest year for insured losses.

“It’s important to note these losses are coming from not any one single type of event,” said Craig Stewart, the group’s vice-president of climate change and federal issues.

“They’re coming from floods, from wildfires, from hail storms, from hurricanes and and literally they’re happening from coast to coast and they’re escalating.”

In all, four out of the five priciest years on record (adjusted for inflation) have been in the past decade, with the only exception being 1998, the year of a devastating ice storm in Quebec.

While wildfires wreaked havoc on many communities this summer, flooding remains the costliest weather-related event.

1.5 million homes without coverage

The high likelihood of flooding in some areas has made insurance companies reluctant to offer coverage, Stewart said.

“People are frankly living on flood plains across the country,” he said.

“We’re already seeing a shift in the insurance market for flooding. There are about 1.5 million homes across the country that simply cannot get affordable flood insurance today.”

On the whole, home insurance and mortgage insurance have climbed an average of 33 per cent over the five-year period from April 1, 2018, to the same month in 2023, according to Statistics Canada.

Stewart’s group has been pressing the federal government to put in place a national flood insurance program that would provide coverage in high-risk areas. There’s no firm timeline for when that will be in place.

Joanna Kanga, a spokesperson for the minister of Emergency Preparedness, said the federal government “continues to engage provinces and territories, industry stakeholders and Indigenous representatives on the development and implementation of the low-cost flood insurance program.”

The problem with flood insurance

Shaun Sinclair, a former insurance adjuster and program head for BCIT General Insurance and Risk Management, talks about why flood insurance was only introduced recently and why it’s so difficult to control costs.

The federal government announced its first climate adaptation strategy in 2022, aimed at making communities more resilient to weather disasters.

Pinochet, a well-known artist whose paintings document the region, said he was unable to get flood insurance because his home was situated on a flood plain, in a low-lying area between two rivers.

The municipality ended up stepping in to buy the property, and he received a payout as part of a disaster-relief program.

Pinochet now rents a place farther from the water.

“I accept what happened. And I’m going to try to do my best to be happy in my new place and continue to make my work,” he said.

Savings in adaptation

A federal government plan is necessary to ensure property owners have coverage, but Canadians need to take precautions themselves, said Anabela Bonada, a research associate at the University of Waterloo’s Intact Centre on Climate Adaptation.

“For example, if you’re in a wildfire-prone area, it’s just maintaining the vegetation around your home — not having any sort of flammable material up to 1.5 meters from your home, cleaning out your gutters, removing any dead leaves, all of that will start to protect your home from wildfire,” she said.

“If you’re in a flood-prone area, you can install a backwater valve, a sump pump, and this can really help protect your home,” she added.

“There is so much that can be done for people to protect themselves from these perils.”

Insured losses reflect just a small part of the damage caused by extreme weather and highlight the need for governments to put more money into adaptation measures, said Ryan Ness, a research director with the Canadian Climate Institute.

A report by the institute estimated that every dollar invested in climate adaptation, such as designing roads to make them more resilient to flooding, will return $13 to $15 in avoided costs.

“A small amount of investment up front … can pay itself off many, many times over,” he told Daybreak South, CBC Radio’s Kelowna, B.C., morning show.