Severe weather events are driving up insurance costs in Canada as water damage claims continue to rise, according to a report from The Suburban.
According to Allstate Insurance Company of Canada (Allstate Canada), water damage is one of the leading reasons for home insurance claims. The cost of repairing a water-damaged basement has increased by nearly 20 per cent between 2019 and 2024, reflecting both the frequency of incidents and the rising cost of repairs.
The Insurance Bureau of Canada (IBC) reported that 2024 was the most expensive year on record for weather-related losses, with flooding alone contributing to more than $1 billion in damages.
“In recent years, heavy rainfalls have increased in Canada, putting more homes in flooded areas at risk,” said Marc Tannous, agency manager at Allstate Insurance, in a press release. Montreal, which experienced major flooding in 2017, 2019, and August 2024, is among the cities facing repeated damage.
A Léger poll conducted for Allstate Canada found that 80 per cent of surveyed Canadians have a basement, and one in 10 have experienced basement flooding. Many homeowners store valuables in these spaces, amplifying the financial impact of water-related damage.
The poll also revealed that 61 per cent of respondents have a bathroom, sink, or access to running water in their basement, further increasing the risk of internal leaks and flooding.
As claims rise, insurance providers are adjusting coverage and costs. Homeowners are being urged to review their policies to ensure they have adequate protection.
“Review your home insurance policy to understand your coverage for water damage—coverage is optional in many areas across Canada,” said Odel Laing, agency manager at Allstate Canada. Some policies exclude overland flood coverage, leaving homeowners vulnerable to significant out-of-pocket expenses.
Insurance companies are also advising homeowners to take preventive measures. Installing leak detectors, elevating electronics, and using waterproof storage solutions can help minimize damage. Consulting professionals on flood mitigation strategies, such as improving drainage around the home’s foundation, may also reduce risks.
As climate-related threats grow, the insurance industry is facing increased pressure to balance rising claims with policy affordability, leaving homeowners with higher premiums and greater financial uncertainty.
