Young Canadians are taking climate change into account when buying a home.
A new survey compiled by Leger for RATESDOTCA and BNN Bloomberg has found that 60 per cent of young homeowners (18-34) considered the potential effects of climate change in the location they were buying their home. That compares to 31 per cent of those 35-54, and just 27 per cent of those over the age of 55.
Major insurance companies around the world have been sounding the alarm for years about the rising costs of insuring homes in areas that are more at risk for extreme events fuelled by climate change, including floods and forest fires.
In the U.S., Florida and California have been two markets where many homeowners have been shocked to discover no insurance companies will insure them, or the ones that do, charge prices that are impossible for the average homeowner to afford. In May, State Farm announced it would stop issuing new insurance policies in California — not just in areas at risk of wildfires, but throughout the entire state.
Insurance companies cover the cost of paying out claims from the premiums they charge customers. If claims exceed premiums, then the insurance company is not a viable business. Unfortunately, the extreme weather events accelerated by human-induced climate change have led to rapidly rising claims for insurance companies.
One of the most valuable piece of insurance coverage for homeowners is the replacement value of your home. That means if your home burns down, the insurance company will pay to construct an equivalent structure. Unfortunately, construction costs have risen due to inflation, and the number of such claims are going up due to climate change. This is a growing problem for the industry and will increasingly raise costs for customers.
Unfortunately, even with all the risks, relatively few Canadians are taking out additional insurance endorsements to cover them in the event of extreme weather events that are now being worsened by climate change.
Only 12 per cent of those surveyed said they had taken out an additional endorsement, such as overland flooding, which can protect you in the event a nearby river or body of water overflows and floods your home. Another six per cent said they had taken out two or more additional policies.
Once again, younger homeowners were more likely to take out such policies. Twenty-six per cent of those aged 18-34 said they took out one or more policies, while only 15 per cent of those 34-54 had. Another 17 per cent of those aged 55 and over had taken out such policies.
One-in-three homeowners who have bought a home in the past two years have taken out an additional endorsement, compared to just 16 per cent of those who bought their home more than two years ago.
An online survey. 1525 Canadians, 18+. Completed between June 2nd and June 5th, 2023, using Leger’s online panel. No margin of error can be associated with a non-probability sample (i.e. a web panel in this case). For comparative purposes, though, a probability sample of 1525 respondents would have a margin of error of ±2.5%, 19 times out of 20.
BNN Bloomberg has teamed up with RATESDOTCA to take the pulse of Canadians every month on key pocketbook issues as we strive to better understand how households are navigating COVID-19. This is the latest instalment in monthly special coverage.