Christopher Liew is a CFP®, CFA Charterholder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers at Blueprint Financial.
From intense rainstorms and floods to wildfires and hailstorms, climate change is contributing to more frequent and severe weather events both in Canada and around the globe.
These unexpected disasters are increasingly costly, and insurance companies are paying out record amounts for related damage claims. As a result, homeowners are starting to feel the impact in the form of higher home insurance premiums.
Below, I’ll discuss some reasons why climate change is driving premiums up and offer some practical ways that homeowners can keep their insurance costs from skyrocketing in the coming years.
Climate change is fuelling extreme weather events
Canada is witnessing more extreme weather events due to climate change.
Wildfires in Alberta, flash floods in Ontario and once-rare hailstorms hammering Prairie cities have shifted the financial balance for insurance companies. Insurers rely on carefully-balanced algorithms (which account for predictable/historic weather patterns) to set premium rates for property owners.
Floods and wildfires, in particular, are growing threats, with flooding now the most common (and costly) hazard for many communities. In addition to damage to housing, these events have also wreaked havoc on the electrical grid, which could leave residents stranded without heat during sub-zero winter.
As these events become less predictable and more frequent, property owners are seeing new spikes in their insurance premiums as insurers struggle to adjust.
According to a recent report from the Insurance Bureau of Canada, payouts for climate-fuelled catastrophes hit a record C$8 billion in 2024, nearly triple the previous year and twelve times the average of the early 2000s.
Those losses are flowing straight into premiums. An industry study by Canadian Underwriter showed that the typical home-insurance bill rose 5.3 per cent nationwide in 2025, with Alberta residents facing hikes of more than 9 per cent.
Tips for homeowners to reduce insurance costs
Unfortunately, outside of moving to a region with statistically lower weather incidents, there’s little that the average homeowner can do to reduce climate-related insurance hikes.
That being said, there are a number of strategies that all homeowners can employ to reduce their home insurance premium and get a more affordable rate.
1. Increase your deductible
Your deductible is the amount that you, as the policyholder, are required to pay out of pocket before your insurance company picks up the rest of the bill. One of the simplest ways to reduce your monthly premium is to increase your deductible.
By increasing the amount that you’re willing to pay upfront in the event of a claim, you represent a lower financial risk to your insurer, which will automatically qualify you for lower rates. This same strategy can also be used to reduce your auto insurance.
Just keep in mind that you’ll need enough savings to cover that higher deductible if something happens. Also, if the cost of damage is only a little more than your deductible, it might not be worth the time to make a claim. In those cases, you’re more likely better of paying for these smaller issues yourself.
2. Bundle insurance policies
You’ve probably heard this in a TV commercial before. Nearly all insurance companies offer discounts to customers who are willing to purchase multiple insurance policies through the same company.
One of the easiest ways to do that is to purchase your home insurance and auto insurance policies together, referred to as “bundling.”
3. Fortify your home
If you live in a higher-risk region of the country, fortifying your home against disasters is another way to help reduce your insurance costs. Some examples of this could be:
- Fire-resistant coating on the outside of your house
- Sump pumps or additional drainage to prevent flooding
- Glass windows capable of withstanding high winds
- High-strength roofs
- Burglar alarms and security systems to prevent robbery
While these home defences may not be completely foolproof, they can certainly reduce the likelihood of damage and insurance claims and reduce the total damage your home sustains from an extreme weather event or attempted robbery.
These upgrades reduce the likelihood and severity of claims, which can potentially lead to lower monthly premiums.
So make sure to inform your insurance company anytime you make any home improvements to protect your property against extreme weather. Also, many home improvements you make can help you qualify for federal or provincial tax credits.
4. Ask about individual discounts
Some insurance companies offer individual discounts that you can ask about, such as:
- Senior discounts
- Military discounts
- Loyalty discount (if you’re with the same insurer for years)
- Mortgage-free discount (if you own your home outright)
Your insurer may not offer these discounts upfront, so you may need to call and speak to an agent to get qualified for them.
5. Compare insurance companies
Lastly, if you’re not getting the discounts you’re looking for, it’s never a bad idea to compare rates from other companies.
You can use an online insurance aggregator service to input some basic information about your home, and within 24 hours, you’ll begin receiving customized, competitive, quotes from insurance companies.
Final thoughts
Our global climate is changing, and with it, the weather is becoming increasingly unpredictable. Unfortunately, there’s not a lot that individuals can do to stop this.
As the likelihood of home damage increases, so will insurance premiums. However, by using some of the strategies mentioned above, you can try to control the rate hikes and may even be able to reduce your rates in some cases.
