Home insurance costs in Canada are under mounting pressure due to skyrocketing construction expenses, skilled labor shortages, and increasing losses from natural disasters. Statistics Canada’s October Consumer Price Index (CPI) highlights a 66% rise in residential building construction costs over the past five years, far outpacing the 19% general inflation rate. Home replacement costs have also increased by 24% nationally, with Alberta experiencing even higher spikes—73% in construction costs and 29% in replacement costs—due to a record-breaking severe weather season.

The Insurance Bureau of Canada (IBC) attributes rising home insurance premiums to these compounding factors. Skilled labor shortages are exacerbating delays and increasing costs for rebuilding and repairs. BuildForce Canada projects significant labor deficits, with 25,000–28,000 annual retirements in the construction industry until 2033, while demand for 88,400 additional workers remains unmet. Meanwhile, severe weather has caused unprecedented insured losses, exceeding $7.8 billion in 2024—the highest in Canadian history.

IBC emphasizes the need for government action to mitigate these pressures. Policies that prioritize resilient infrastructure, updated building codes, and stricter land-use planning—such as avoiding construction on flood plains or wildfire-prone areas—are essential. Without decisive steps, home insurance premiums are expected to keep rising, making coverage less affordable for Canadians.

Craig Stewart, IBC’s Vice-President of Climate Change, stresses that fostering a sustainable home insurance market requires proactive risk reduction measures and investments in community resilience. Addressing labor shortages and controlling rebuilding costs are also critical to stabilizing the insurance sector.

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