Inflation is at the highest that it has been since the early 1990s.
Food, gas, and cars have been most notable to the public as they are items we see the most.
Unfortunately, home insurance is no different, and the prices have steadily increased over the last few years, especially with the COVID-19 pandemic. In the previous ten years, between 2011 and 2021, home insurance has grown at a rate of 140%
So why has there been this sudden drastic increase in prices?
One factor is inflation. Inflation will affect every commodity, from food to clothing to home insurance. However, this can only explain part of the picture. Within the same 10-year time frame, inflation has only risen around 17%.
Increase in Claims
A significant increase in claims is another factor in the rise in home insurance. IBC data shows personal shares have tripled since 1996, from $2.3 billion to $7.2 billion.
Many factors can cause inflation. In the past few years, more people have moved into places like Edmonton and Calgary rather than moving out.
As the cost-of-living increases, especially in bigger cities like Vancouver and Ontario, people find that moving to Alberta is the best choice for their living situation.
For the numbers, 7,220 people moved from Ontario to Alberta, 6,435 from British Columbia, 3,0825 from Saskatchewan, and 2,060 from Manitoba. In total, 22,013 moved to Alberta, whereas 17,524 left for another province. Suppose this trend continues, and there is an increase in population rather than a decrease. In that case, many say you will (unfortunately) have to expect your home insurance premiums to keep rising.
Floods and wildfires have become more intense in the past few decades, leading to many people needing to make claims.
Experts say these natural disasters are due to climate change. The University of Alberta Prof. Michael Flannigan states, “We burn about 2.5 million hectares a year on average – It’s more than doubled since the late ‘60s and early ‘70s”.
Potential flooding could also become an issue. The Alberta flood of 2013 was said to be one of, if not the worst, floods in Alberta’s history. However, some say this will not be the case for long due to climate change. Natural disasters play a significant part in the price of insurance, and an increase in natural disasters will lead to a rise in claims, which in turn will increase home insurance premiums.
Not Just in Alberta, But Globally.
The vast increase in Home Insurance is more than just an issue for Alberta and Canada.
There has been a noticeable increase in insurance at a much faster rate than inflation.
Although not as noticeable, in the United States, from 2009 to 2019, average home insurance premiums have gone up almost 45%. Australia has been hit the hardest during the same ten-year period; they have seen an increase of 140% in average home insurance premiums. However, the United Kingdom seems to be an outlier, with an increase of less than 25% between 2012 and 2022. This is also paired with the fact that home insurance premiums have dropped an average of 9% over the last year.
Unfortunately, home insurance premiums in Alberta are rising at a rate higher than in other provinces in Canada. However, homeowners are not left entirely at the mercy of insurance companies for the cost of home insurance. There are many ways that homeowners can decrease the overall cost of their home insurance, such as working with an independent brokerage like Harbord that strives to get you the best coverage and best price.
Get in Contact with Harbord – The Home Insurance People
As always, if you have any questions on how we can help you with your premium increase, please do not hesitate to contact us by phone at 1-866-544-4663 or email us at [email protected]. You can also visit our contact page. We look forward to hearing from you!