How even a single water damage claim affects your homeowner clients

A single water damage claim can increase a homeowner’s insurance premiums in Ontario by an average of 19%, or $376 a year, according to a new report from Rates.ca.

And multiple water-related claims drive even sharper increases, with premiums rising by close to one-third for some Ontario homeowners, Rates.ca reports.

These premium increases come as weather-related claims grow more frequent and more expensive. Since 2019, the cost of repairing weather-damaged property in Canada has surged by 485%, and flooding alone has caused an average of $800 million in insured losses annually over the past decade, according to the Insurance Bureau of Canada.

“Overland flooding is the most common and costly natural disaster in Canada, yet only about half of homeowners carry coverage for it,” says Daniel Ivans, a Rates.ca insurance expert. “When flooding does happen, the challenges don’t end with the water damage itself.”

Labour shortages and inflated material costs, especially outside major cities, make recovery slower and far more expensive, Ivans says.

“Tariffs on construction materials are also adding another layer of costs, which contractors inevitably pass on to homeowners,” he says. “That combination leaves many families facing long delays and higher out-of-pocket expenses.” 

As an example, U.S. President Donald Trump will impose a 10% tariff on imports of Canadian softwood timber and lumber effective Oct. 14, The Canadian Press reported Sept. 30.

Greater premium variability

Across Ontario, homeowners are seeing greater premium variability as insurers factor in aging infrastructure, rising material costs, and increased exposure to flooding, Rates.ca says.

“In Ontario, a homeowner’s location can have a big impact on their premiums,” Ivans says. “Low-lying or flood-prone areas are more vulnerable, while newer developments on higher ground tend to be better protected. When you add aging infrastructure and rising repair costs into the mix, it creates more variability in premiums across the province.” 

Rates.ca’s report also found wind-hail claims are on par with water claims, adding an average of $386 a year to Ontario home insurance premiums, compared to $376 for water damage. Fire is an persistent concern too, with Canada experiencing one of its worst wildfire seasons on record this year.

“The early start to wildfire season contributed to a deterioration of personal property insurance results in Newfoundland and Labrador, Ontario, Manitoba and Saskatchewan,” Grant Kelly, chief economist and vice president of financial analysis and regulatory affairs with the Property and Casualty Insurance Compensation Corporation (PACICC), writes in the company’s latest Solvency Matters report.

He notes that although Canada’s P&C industry had ‘perfectly average’ financial results in the first six months of 2025, ‘unsustainable’ troughs are forming in personal property and auto lines’ profitability.

In personal property insurance written in Newfoundland and Labrador, Ontario, Manitoba, and Saskatchewan, the net comprehensive combined ratios (NCCRs) generated were greater than 100%, indicating that a line of coverage is eroding the industry’s capital base.

NCCRs are a measure of underwriting profitability that includes the impact of insurance service expenses, reinsurance expenses, general and operating expenses, and net insurance finance expenses, all relative to net insurance revenue.

Insurers are seeing higher claims costs due to the increased frequency and severity of natural disasters.

For example, Intact Financial Corporation’s personal property Cat loss ratio for Canada increased to 6% in 2025 Q2 from 1.4% in 2024 Q2, according to the insurer’s Management’s Discussion and Analysis for the quarter.

For Allstate Canada, 2024 large-scale NatCat events generated the most claims in a decade — approximately 2.4 times more than in 2023.