Insurance Premiums Dip for Homes, But Rise Drastically for Condos
Following a year filled with bad news, many Canadian homeowners received some much-needed positivity in the first quarter of the year as home insurance rates declined in British Columbia, Alberta, and Ontario.
Unfortunately, the good news wasn’t shared with condo owners, as prices for condo premiums saw double-digit increases throughout British Columbia and Alberta, while rates rose just below 10% in Ontario, according to LowestRates.ca’s Home Insurance Price Index Report for Q1-2021.
According to the index, released Tuesday, home insurance premiums quoted on LowestRates.ca were down on an annual basis by 12% in British Columbia, 6% in Alberta, and 1% in Ontario.
Given that a larger number of Canadians were working from home amid the pandemic, it’s resulted in an interesting side effect on home insurance: there are fewer opportunities for damage to occur from fire, flooding or theft.
“A lot of losses happen when people aren’t home,” says Justin Thouin, co-founder of LowestRates.ca. “Fire or water damage happens when people aren’t home, or the damage is more extensive when they aren’t there. There’s fewer of those losses.”
However, the report says rising costs of materials like lumber, labour shortages, and the demand for renovations could drive rates higher in the future, as well as more frequent and severe environmental catastrophes.
During this same period, condo insurance rose in all three provinces, as ageing infrastructure, increasing deductibles, and the need for more competition continues to drive rates up. According to the report, condo premiums in Ontario and Alberta rose 9% and 16%, respectively during Q1-2021, while rates in British Columbia jumped a staggering 27% year-over-year.
“This is a pivotal moment in time for the insurance industry. We’re seeing insurance rates skyrocket nearly 30% year-over-year for some condo owners, but drop double-digits for homeowners like we’re seeing in British Columbia,” said Thouin. “There are competing conditions at-play — regulatory changes and competition are improving, but environmental impact is a real threat to rate premiums.”
As for what’s to come, the Property and Casualty Insurance Compensation Corporation (PACICC) says the insurance industry faced its “lowest level of profitability since 2001,” last year, but is showing signs of recovery with 87.5% of Canadian insurers reporting profits in Q1-2021.
While residents staying home during the pandemic resulted in fewer claims on small events throughout the past year, environmental disasters still pose a real financial threat and have increased over the long term.
“Our recommendation to Canadians is always to ensure you know what you’re insured for, and shop around to compare rates to save money where and when you can,” added Thouin.