Home insurance costs in Canada are climbing due to frequent and severe natural disasters. Rising construction expenses add to affordability challenges. Statistics Canada’s October Consumer Price Index (CPI) shows that residential building construction costs have surged by 66% over five years, significantly outpacing the 19% general inflation rate.
Home replacement costs, reflecting the expense to rebuild a house entirely, have risen 24% since 2019. In Alberta, which experienced record-breaking hailstorms this summer, costs are even higher.
The cost to rebuild a home in Canada continues to rise, which is driving up home insurance premiums
Liam McGuinty, Vice-President, Strategy, Insurance Bureau of Canada (IBC)
Replacement costs in the province have grown by 29%, while residential building construction costs have jumped by 73%, exceeding the national average.
Liam McGuinty noted that labour shortages and escalating losses from natural disasters compound the issue, further straining the insurance sector.
The IBC highlights the disproportionate impact of these trends on home insurance. Since 2019, claims for personal property damage have risen by 115%, while repair and replacement costs have increased by 485%.
Craig Stewart, Vice-President, Climate Change and Federal Issues at IBC, urged governments to act swiftly. He noted the need for resilient infrastructure, improved land-use planning, and updated building codes to reduce risks.
Canada’s insurers are helping communities adapt to severe weather, but without decisive action from all levels of government, pressure on home insurance premiums will continue to grow
Key Challenges Impacting Home Insurance Costs
- Rising Construction Costs: Residential building and home replacement costs have grown far beyond inflation over five years, with Alberta seeing even steeper increases.
- Labour Shortages: The construction sector faces a critical shortage of skilled workers. BuildForce Canada estimates that 25,000–28,000 construction workers will retire annually until 2033, while the sector needs an additional 88,400 workers to meet demand. This gap delays property repairs and increases costs.
- Record Natural Disaster Losses: Severe weather events caused $3.5 bn in insured damage in 2023. By 2024, losses have already surpassed $7.8 bn, marking the costliest year in Canadian history for insured losses.
IBC continues to push for government investment in disaster mitigation measures. This includes resilient infrastructure, zoning policies to avoid high-risk areas, and stronger building codes to protect homes and communities. Without such action, the sustainability of home insurance markets remains under threat.
