Many of those with auto insurance policies in Alberta have been watching their premiums slowly increase over the last few years with great frustraion. The saving grace, however, has been relatively stable costs for home insurance, despite a litany of natural disasters including a monster hailstorm on Aug. 5 in Calgary.
That stability may not last much longer, unfortunately, according to the Insurance Bureau of Canada (IBC). While overall inflation has been steadily decreasing in Canada, new data from Statistics Canada’s October Consumer Price Index (CPI) Report reveals that the main factors driving the cost of home insurance are still elevated. Most notably, the report highlights that residential building construction costs have increased by 66% over the past five years, far outpacing the 19% general inflation rate during the same period.
According to the CPI, since 2019 there has been a 66% rise in residential building construction costs, which includes the contractor’s price for all materials, labour, equipment, overhead, and profit to construct a new building.
Canada has seen a 24% increase in home replacement costs overall. Throughout the country, the cost to rebuild a home is steadily increasing as personal property damage and severe weather claims skyrocket. Since 2019, Canada has experienced a 115% increase in the number of claims for personal property damage and a 485% increase in the costs associated with repairing and replacing personal property damaged by severe weather.
Home replacement costs are calculated as the amount it takes to rebuild a home from the ground up and are one of the ways a home insurance policy’s value is determined.
Home construction costs in Alberta skyrocketing
In Alberta, home construction costs have blown past the national average. Statistics Canada data shows that Alberta has experienced a 29% increase in home replacement costs and a 73% increase in residential building construction costs.
The IBC is also warning about these additional pressures on home insurance costs:
- A March 2024 report by BuildForce Canada shows a severe shortage of skilled labour in the construction industry. Between 25,000 and 28,000 construction workers are expected to retire annually until 2033, however, to meet construction demands during the same period the labour force must expand by 88,400 workers.
- Severe weather events in 2023 caused over $3.5 billion in insured damages across Canada, ranking among the highest annual totals in four decades. In 2024, insured losses have already exceeded $7.8 billion, making it the costliest year for claims in Canadian history.
Craig Stewart, Vice-President, Climate Change and Federal Issues, IBC, warns, “If Canadian governments fail to take decisive action to create more resilient communities, it is expected that pressures on home insurance premiums will continue. IBC has been urging all levels of government to invest in resilient infrastructure, adopt land-use planning regulations that prevent homes from being built on flood plains and in high-risk wildfire zones, and implement building codes that better protect homes and livelihoods.
“The only way to foster a more sustainable home insurance market is to take concrete action to address the risks facing Canadians nationwide.”
Combine policies for a discount
One of the easiest ways to save on your insurance costs is to combine your home and auto insurance policies … otherwise known as bundling. Lots of insurance providers offer substantial discounts to customers who purchase multiple policies, which reduces overall premiums and makes coverage more affordable. Discounts can often amount to from 10 to 25% of the combined cost, which save you several hundred dollars a year.
Bundling also places all of your insurance needs with the same provider, allowing all your payments to come out at the same time. You may also be able to streamline your policies so that renewal is at the same time each year, as well. This simplification reduces administrative burdens, which helps to lower costs, and ensures a more efficient experience.
Insurers also offer perks or additional benefits to bundled policyholders, such as higher liability limits or complimentary services like identity theft protection.
Finally, having one insurer for both your home and auto can help facilitate an easier claims process in the case that an insured incident affects both, such as this summer’s hailstorm.
Dealing with one company for both claims saves time and reduces stress.
Top-notch service and low rates from Lane’s Insurance
Lane’s Insurance is a leading Alberta-based brokerage that works with some of the top-rated and most respected insurance carriers in the province. In addition to outstanding claims support and value-added service, Lane’s Insurance helps you save by getting insurers to bid on your business. The end result is fantastic coverage at great rates.
To learn more, or to simply discuss your insurance needs, please contact us at Lane’s Insurance today.
