As most Canadian homeowners know, home insurance premiums continue to rise dramatically year after year. The Insurance Bureau of Canada(IBC) says the premiums are justified due to higher payouts from weather related disasters over the last few years.
According to Anne Marie Thomas, a spokeswoman for InsuranceHotline.com, the average home insurance plan costs 19 percent more every year. The premiums for many homeowners are likely to exceed $1,000 when the latest rate hike is implemented later this year.
Thomas describes the steep annual increases as the result of powerful weather events recently that have overwhelmed Canada’s aging infrastructure. Thomas says that to recoup the losses, insurers must raise rates.
“It’s about claims cost – insurance companies pass them along to consumers like you and I.”
The IBC says that in 2007, the annual payout of home insurance due to weather related disasters was approximately $167 million. In 2008, following a series of powerful rain storms during the summer months, those payouts more than doubled to $392 million. Over the next three years, weather related damages cost home insurers over $1 billion each year. At the same time, the IBC predicts many insurers will slash the number of items their policies will insure.
In the end, more people will pay more money to insure fewer items within their homes, which only fuels the frustration shared by millions of Canadians that home insurance isn’t worth the cost.