Houses for sale in Ottawa

Roughly 6-10% of homes already have a flood risk so high that insurers won’t come near them

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Canada needs to create 3.5 million more affordable housing units, but the government could create a new crisis altogether if it isn’t strategic in how it chooses to address the issue, experts say.

Most of the discussion about the housing crisis focuses on building green homes, said Craig Stewart, vice-president of climate change and federal issues at the Insurance Board of Canada, but there’s not enough emphasis on building “resilient” homes. And that could create problems with insurance down the road.

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“The way that we build those homes and where we build those homes needs to be carefully contemplated, so the new owners of those homes don’t face challenges in the next decade,” he said. “We need to be careful to avoid creating another crisis.”

The federal government has plans to build 100,000 new homes through its Housing Accelerator Fund, but any new homes constructed need to be extreme-weather proof, Stewart said. The recent wildfires in British Columbia and the Northwest Territories show that extreme weather is becoming more common. Insurance claims from catastrophic natural events have been trending upward since 1983, and totalled $3.1 billion in 2022.

“Insurers do ascribe the increase in severe weather events to climate change. They believe there is a direct correlation, particularly for wildfire, drought and extreme precipitation events,” Stewart said. “There’s no way to account for that than through these events we’re seeing today.”

Roughly six to 10 per cent of Canadian homes already have a flood risk so high that insurers won’t come near them, prompting the government to announce a plan to create a national flood insurance program. Uninsured homes are bad news for homeowners, who will have to absorb the cost of any damages rather than be reimbursed by insurers.

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Homes in high-risk communities could also diminish in value because people won’t want to buy there, Stewart said.

Nobody would have predicted that Halifax was at a high risk of wildfires a year ago

Craig Stewart

“Insurers attempt to map different perils, but we are continually surprised,” he said, adding that nowhere is safe now; even areas not considered high risk have recently experienced extreme weather events. “Nobody would have predicted that Halifax was at a high risk of wildfires a year ago.”

Ontarians are at risk as well, albeit indirectly. In mid-August, smoke from wildfires in Quebec drifted into Ontario, affecting air quality.

Resilience isn’t discussed as often as it should be, said Kathryn Bakos, director of climate finance and science at the Intact Centre on Climate Adaptation, an applied research centre.

“We need to start having conversations about where we’re building, and we have to stop building homes and communities in high-risk areas,” she said. “We need to stop building homes on floodplains, and we need to stop building homes near the ‘wildland urban interface’ where high vegetation areas meet human settlements.”

As insurance claims mount, insurers are becoming increasingly wary of homes that aren’t resilient. In the United States, insurance providers are refusing to provide property insurance in places with the greatest climate risk: Florida, Louisiana and California.

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“These insurance companies have done their calculations and they have determined that the risk is too great,” Bakos said. “They cannot charge a premium high enough that individuals would realistically be able to afford to pay for the risk in the system.”

The worst-case scenario is playing out in the U.S., she said, but Canada is well-prepared to respond.

“We can see these devastating events happening in the States and how that’s playing out,” she said. “We are in a very good place here in Canada because we know what to do. We’ve done the research.”

Homeowners who are concerned about the resiliency of their home can visit the Flood Ready or Fire Smart Canada websites, or speak to their insurance provider about their coverage to ensure their insurance matches the risks, Stewart said.

He said those looking to buy a home need to pay attention to where the house is located, how it is built, whether there are good sump pumps in the basement, whether the home is elevated and whether the composition of the siding and roofing are resistant to wildfires, among other factors.

All of those things are worth checking, Bakos said, because home damage due to flood, wildfire or other natural disasters can be extremely stressful.

“The time being out of home, living out of a hotel or living with family, repairing your home,” she said. “There are mental-health costs associated, not just financial costs.”

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