Why Home Insurance Costs Are Rising in Canada
Many Canadian homeowners are shocked when their insurance renewal arrives with a noticeable increase—even when they haven’t made a claim. Home insurance costs have been climbing faster than inflation, driven by a mix of climate-related losses, higher construction costs, and changes in how insurers assess risk.
Unlike discretionary expenses, home insurance isn’t optional. Mortgage lenders require it, municipalities increasingly mandate certain coverages, and replacement costs continue to rise. Understanding what actually affects your premium is now essential to managing the true cost of homeownership.
The Biggest Factors That Affect Your Home Insurance Premium
1) Location & Postal Code Risk
Where your home is located is one of the strongest predictors of insurance cost. Insurers analyze postal-code-level data, not just city or province.
Proximity to rivers, aging storm drains, and low-lying areas increase risk.
Expanded wildfire maps now include areas previously considered low risk.
Break-ins and vandalism claims affect neighbourhood pricing.
2) Age of the Home & Core Systems
Insurers look closely at your home’s key systems. Older doesn’t automatically mean higher premiums—but outdated materials do.
| System | Lower Risk | Higher Risk / Surcharge |
|---|---|---|
| Roof | Asphalt < 15 yrs | Worn, flat, or older roofs |
| Electrical | Copper wiring | Aluminum or knob-and-tube |
| Plumbing | Copper / PEX | Poly-B or galvanized steel |
| Heating | Modern furnace/heat pump | Wood stoves, aging systems |
3) Replacement Cost (Not Market Value)
Insurance covers the cost to rebuild your home after a total loss—not what you paid for it. Rising labour and material costs have dramatically increased replacement values.
4) Claims History (Yours & the Property’s)
Insurers track both personal claims and claims tied to the property itself. Water-related claims carry the greatest weight and can affect premiums for years.
5) Coverage Types & Deductibles
Optional coverages—such as sewer backup, overland flood, and wildfire protection—add cost but are increasingly necessary. Higher deductibles can lower premiums, but increase out-of-pocket risk.
6) Home Features That Increase Risk
- Fireplaces and wood-burning stoves
- Pools, hot tubs, trampolines
- Rental units or Airbnb usage
- Home-based businesses
7) Credit-Based Insurance Scoring (Where Allowed)
In provinces where permitted, insurers may use credit behaviour—not income—to assess risk. Late payments and high utilization can raise premiums, while consistent payment history can reduce them.
Climate Risk & Insurance (The Fastest-Growing Cost Driver)
Flooding is now the leading cause of insured losses in Canada, surpassing fire and wind. At the same time, wildfire seasons are longer and more intense.
Homeowners who invest in resilience—such as sump pumps, backwater valves, and exterior upgrades—are increasingly favoured by insurers. Learn more in our guide on protecting your home from extreme weather.
Average Home Insurance Costs in Canada (Contextual Ranges)
Ranges vary by home type, location, and coverage.
| Region | Typical Annual Range | Main Cost Drivers |
|---|---|---|
| Ontario | $1,200 – $2,500+ | Flood risk, rebuild costs |
| British Columbia | $1,300 – $2,800+ | Wildfire, earthquake riders |
| Alberta | $1,500 – $3,000+ | Hail, wind, rebuild inflation |
| Quebec | $800 – $1,600 | Lower rebuild costs |
| Atlantic Canada | $1,000 – $2,200 | Storm surge, aging homes |
How Insurers Decide Your Renewal Increase
Even with no claims, your premium may rise due to broader portfolio losses, reinsurance costs, or updated risk models. Insurers also rebalance exposure by region, meaning entire neighbourhoods can see increases.
Practical Ways to Lower Your Home Insurance Premium
- Install sump pumps, backwater valves, and leak sensors
- Upgrade roofs and document the work
- Bundle auto and home policies
- Increase deductibles strategically
- Review policies annually with a broker
When Rising Insurance Costs Affect Financing
Lenders require adequate insurance for mortgages and refinancing. In high-risk zones, limited coverage options can delay approvals or increase borrowing costs.
Some homeowners use equity strategically to fund resilience upgrades that lower insurance risk. You can explore this using the Home Equity Calculator.
Frequently Asked Questions
Portfolio losses, climate risk, and rebuild cost inflation often drive increases.
Water protection, roof upgrades, and monitored security systems.
Yes, in high-risk areas or with outdated systems.
Every 1–2 years or after major upgrades.
