Elodie Audet-Gluck, B.A.

How Climate Change Affects Insurance

Besides your insurance record and claims history, several factors beyond your control can affect your annual premium. Climate change is a good example; currently, it causes nearly 90% of claims worldwide. Due to its unpredictable nature, climate change can affect your premium. Discover below how climate change affects the insurance industry.

We are not immune

We may often think that, in Quebec, climate change does not affect us as much as elsewhere in the world. That being said, natural disasters do exist in our province. Heavy rain, hail, windstorms, tornadoes, floods, forest fires, and earthquakes are all now part of our reality, and their frequency has increased from year to year. Just recently, one of the largest earthquakes of the year took place in the Upper Laurentians. It reached 4.3 on the Richter scale and dethroned the most recent shock of this magnitude, which had occurred in 2015. It goes to show that we are not truly immune to this type of event.

These events are commonly referred to as “acts of God,” and contrary to popular belief, they are almost all insurable, either directly through your basic home insurance policy or by adding an endorsement. To give you an idea, according to an article in La Presse, natural disasters caused $1.9 billion in insured damage in Canada in 2018 alone.

Increased risk

As it is almost impossible to determine when and where the next catastrophe will hit, all regions now represent a potential risk for insurers. Where there is increased risk, there is, to some extent, an increased premium.

Another factor that also comes into play is the amount of compensation paid out for claims associated with climate change. For several years, due to the unexpected increase in these types of claims, insurers have taken a loss so as not to penalize their clients. However, when faced with the persistent nature of climate change events, insurers are finding it necessary to adapt premiums to the situation.

Prevention tips

What can be done to limit damage we may sustain due to these events beyond our control? First, contact your damage insurance broker to understand your limits and coverage and to readjust them as needed. Next, implement simple and realistic prevention measures. Here are some examples:

  • Install a check valve and a submersible pump powered by a battery or generator in your basement 

With frequent rain, the water system often functions at full capacity and may surge back into your home. These additions can prevent such overflow, which is very costly, damaging, and bothersome. You should also add the endorsement related to groundwater infiltration to your insurance policy to cover you in the event of a claim of this nature. Pumps have a limited lifespan; think about changing them every 3 to 5 years.

  • Have your chimney cleaned

Do Quebec’s deep freezes lead you to use your wood-burning unit more frequently? To limit the risks of fire associated with creosote build-up in your chimney, consider having it cleaned annually.

  • Repair cracks in your foundation

Ground motion can affect the foundation of your home and lead to cracks. The accumulation of water following the rapid snowmelt that we experience in Quebec can infiltrate through these cracks and lead to serious damage to your home. Make sure to check your foundation frequently and, if needed, to repair these cracks to prevent damage. Once again, the groundwater infiltration endorsement would cover you in the event of a claim of this nature.

Your Lareau broker works to find an insurance product that is the best fit for you, by updating your file and offering you the best coverage possible. Although your premium may go up, rest assured that these increases are necessary in order to continue compensating clients in the event of a claim.

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Elodie Audet-Gluck, B.A. Underwriter
Personal Lines
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