Does Home Insurance Cover Wildfires, Floods and Climate Risks?

In 2024, Canada experienced an unprecedented year of severe weather, producing record insured losses and widespread damage to homes and infrastructure. A series of disasters—including floods in Toronto, Southern Ontario, British Columbia and Quebec; a wildfire in Jasper, Alberta; and a severe hailstorm in Calgary—combined to produce an estimated $8.5 billion in insured losses, according to the Insurance Bureau of Canada (IBC). The IBC noted this was the first time insured damage from extreme weather exceeded $8 billion in a single year.

These 2024 losses follow a trend of rising catastrophe costs in Canada. From 2009 to 2020, insurers paid an average of $2 billion annually for natural catastrophe-related claims (events causing insured losses of $25 million or more), more than four times the $422 million average recorded between 1983 and 2008. In recent years, insured damage in Canada has repeatedly climbed: 2022 and 2023 each saw roughly $3.1 billion in severe-weather insured losses, and 2024 more than doubled that figure, driven largely by an exceptionally destructive summer.

The summer of 2024 stands out as one of the most damaging seasons on record. In July and August alone, four major weather events generated over $7 billion in insured losses and produced more than a quarter of a million insurance claims—roughly 50% more claims than Canadian insurers typically receive in an entire year. These figures underline how climate-related extremes are reshaping the risk landscape for homeowners and insurers alike.

Other factors shaking up policies

While extreme weather dominates recent headlines, earthquakes remain an important risk in Canada. The country averages more than 4,000 seismic events each year—most too small to be felt—but larger quakes can cause major local and regional damage. British Columbia faces the highest seismic risk, with notable activity also occurring in the Ottawa and St. Lawrence valleys, New Brunswick and offshore Newfoundland. Earthquake coverage is not automatic in most standard home policies; homeowners should ask their insurer about earthquake insurance if they live in higher-risk areas.

Will you need climate change insurance?

There is no single “climate change insurance” product yet; instead, climate impacts influence how insurers assess and price risk. Premiums increasingly reflect local risk factors—flood-prone areas, wildfire zones, and regions prone to hail or severe storms typically face higher rates. That said, extreme weather can affect homeowners anywhere in Canada, and recent catastrophe data show that multiple provinces have experienced major events. Of the top 10 catastrophic events on record in Canada, six occurred in Alberta, and the remainder were in Ontario, Quebec, British Columbia and the Atlantic provinces.

Does your home insurance policy cover floods?

Standard home insurance policies generally cover perils such as wind, hail, fire and lightning. They may also cover certain types of water damage, but not usually flood damage caused by rising surface water or overland flow—something many homeowners discover only after a loss. Similarly, landslides, avalanches and other earth movements are not typically included by default.

Because water-related claims have become the leading source of property damage in Canada, a number of insurers now offer overland flood coverage as an add-on. Providers such as Aviva, Intact, Pembridge and Unica have expanded availability since the first offerings appeared in 2015. Overland flood coverage is now available to the majority of homeowners and has been adopted by a significant portion of policyholders; it typically costs in the range of about $10 to $30 per month when added to an existing home policy.

Insurers may still decline coverage for homes in very high-risk locations. Until a national flood insurance program is established, some homeowners at greatest risk can seek overland flood protection from specific insurers. For example, The Co-operators offers overland flood coverage for higher-risk properties and provides coverage for storm surge damage in areas vulnerable to wave and storm-driven flooding.

“As a co-operative insurer, we felt compelled to respond to the previously unmet need for residential insurance for overland water damage in this country,” Tara Laidman, Associate Vice President, National Product Portfolio, said. “In recent years, weather has contributed to record levels of water damage to Canadian homes—a trend we expect to continue.”

How to get cheaper home insurance

Homeowners can take practical steps to reduce premiums and protect their properties as climate-related risks grow. In June 2024, a coalition of insurers, disaster-relief groups, municipalities, Indigenous organizations, environmental NGOs and researchers—Climate Proof Canada—urged the federal government to adopt a national climate adaptation strategy to help reduce flooding, wildfire and heat risks. While policy solutions progress at the national level, individual homeowners can act now to manage costs and reduce exposure.

Consider these five strategies to lower home insurance costs and improve protection:

1. Shop around. With nearly 200 property and casualty insurers operating in Canada, competition can work in your favor. Compare quotes from multiple companies or work with a broker or comparison service to find the best coverage and rate for your circumstances.
2. Raise your deductible. Increasing your deductible usually lowers your premium. Ensure the deductible remains an amount you can afford to pay immediately if a claim arises, and maintain an emergency fund to cover unexpected costs.
3. Tell your insurer about renovations. Major upgrades—such as a new roof, updated plumbing or installation of a sump pump—can reduce risk and may qualify you for discounts. Some insurers also offer price relief for backup power systems like whole-home generators or battery backups.
4. Bundle policies. Combining home and auto insurance (and other policies) with the same provider often yields multi-policy discounts.
5. Claim every eligible discount. Insurers offer discounts for lower-risk behaviors and features: non-smoking households, fully paid homes, monitored alarm systems or 24-hour condo security, and older homeowners are examples. Employer, union or alumni discounts may also apply. Paying annually instead of monthly can further reduce costs.

Read more about home insurance:

• Does your home insurance cover water damage? Probably not
• Buying home insurance in Canada: A beginner’s guide
• Before you buy, here’s how to compare home insurance
• What is tenant insurance?
• Is my house covered if I’m not living there? Vacant home insurance, explained