Will you pay 22% extra for home insurance subsequent 12 months? – The Motley Idiot Canada

Today, every potential homebuyer is fixated on the housing shortage and rising property prices. But if there's one thing current homebuyers can say to the hopeful it's this: once you have a home, don't expect it to get any easier.

A major concern for Canadian homeowners, whether they own a condo in the city or a house in the suburbs, is the rising cost of home and condominium insurance. In certain areas like Alberta and BC, the cost of condo insurance is around 10 and, respectively, given that many insurance carriers like Intact Insurance are forecasting even more rate hikes in the coming years, this could easily lead to financial tension, especially for Canadians who are barely getting enough have to pass the mortgage stress test.

What happens to the insurance tariffs?

The biggest factor driving insurance prices up is not, as you might expect, inflation or rising timber costs. These are certainly factors, but what burdens the insurance carriers the most is also the least controllable: natural disasters.

Since about 2018, insurance carriers have spent billions and billions of dollars on damage related to natural disasters. In 2021 alone, insurance company Intact covered around $ 2.49 billion in claims from Canadians (another $ 118 went to foreigners). With around $ 5.536 billion in net premiums, it's easy to see why insurance companies are quite concerned about these costly events.

Forest fires are definitely high on the list of concerns. Stronger storms from the coast, along with severe droughts and generally drier conditions, carry fires over long distances and affect homeowners within 75 to 160 miles of the fire. For homeowners moving to fire-hit areas, it can mean getting denied by insurance carriers time and time again, especially if your house has wooden frames.

Since many Canadians still work from home, they also spend more time in their homes. This could annoy normal "wear and tear" such as on pipes and equipment. Potential water damage to a house or an increased number of defective devices could also lead to insurance increases in the coming year.

Are You Paying More For Insurance?

If your insurance premium has not yet increased, you might find yourself in for a nasty surprise in 2022. Most insurance carriers forecast a significant increase in insurance costs, if only to cover the number of claims in 2021.

Even if you don't live in an area at risk of natural disaster, I advise you to prepare for the worst and allow for higher home and condo insurance costs. This could mean reviewing your budget and cutting down on certain expenses (or cutting others) to give yourself some wiggle room.

You may also want to check your insurance policy to see if you are eligible for any discounts. Common discounts include:

  • Home security discount
  • Bundling discount
  • Fire alarm discount
  • Senior discount (for homeowners who have owned a home for a certain number of years)
  • Loyalty discount
  • New home discount
  • Flat rate discount

Can you negotiate your home or condo insurance rates?

It's worth a try. If you've been loyal to a company for a long time or haven't filed a claim in years, there is a very good way to reduce your home or condominium insurance.

One thing I wouldn't do is reduce your insurance coverage. Yes, while you could easily get a lower premium by subtracting coverage, if something happens to your home or condo, it won't be worth it in the long run. For those Canadians who are wondering if they have the right insurance coverage at the best price, I would recommend working with an insurance agent or shopping online and comparing rates. Sometimes you can find a lower rate simply by switching companies, while sometimes you can discover gaps in your insurance coverage simply by working with an insurance professional.

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This article represents the opinion of the author who may disagree with the "official" endorsement position of a Motley Fool Premium Service or Advisor. We are Motley! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer. As a result, we sometimes publish articles that may not match recommendations, rankings, or other content.

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