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Published on August 17th, 2015 | by Guest Contributor


Lawyer David Costa Explains Property Insurance and Climate Change – What You Need to Know!

Property insurance may not be the most exciting thing to talk about, but it’s of utmost importance for all home owners. Understanding how important property insurance and climate change are related is a new issue for both homeowners and insurance companies.


Most of us are quite aware of the kind of extreme weather we’ve experienced on a global level over the past several years.Mega droughts in southwestern United States; colder, longer winters up north; more prevalent hurricane occurrences, the list unfortunately continues.

In Canada, 2013 was a particularly extreme year weather-wise with flooding in Calgary and heavy, unusually prolonged ice storms in Toronto. Extreme, once-in-a-hundred-year type storms and weather systems are now becoming more frequent. 

The short and simple of it is that, because of increasingly extreme weather, it’s becoming more expensive for insurers to provide property insurance.

A case in point: following the extreme weather in Canada in 2013, Intact Financial Corp., one of Canada’s largest property insurers, was forced to raise property insurance premiums by 15 to 20 percent. Deductibles were also increased in many provinces in the country from a base of $500 to one of $1,000.

In the words of an Intact spokesperson, “The insurance product must evolve and adapt to reflect emerging climate change risks and ensure the home insurance product is sustainable, to ensure its availability and affordability across the country for the long term.”

In other words, property insurers, like Intact, operate a business that must make a profit. If they are forced to pay out for more expensive losses at a more frequent rate, they will be forced to push this additional expense onto the consumer by either raising premium rates or, in more extreme scenarios, revising insurance provisions to exclude certain risk scenarios.

Case in point, most Canadian insurers do not offer overland flood insurance on standard insurance policies, despite the fact that flooding has become the largest form of property loss.

Understanding that finding ways to reduce insurance costs is beneficial for both homeowners and insurance companies alike, insurers and insurance regulators are actively finding ways to reduce risk on a broader level. As a result of increasingly catastrophic weather, efforts are being made to do things like reducing the amount of urban runoff, which contributes to flooding, building new construction better and more tolerant of weather extremes, and drawing more accurate flood plain maps.

Homeowners themselves can also be proactive when it comes to their home insurance coverage.

Lawyer David Costa, who leads the full-service Costa Law Firm in Toronto, Canada, advises homeowners that, first off, they should have accurate knowledge of what their property insurance covers and what it does not cover. Furthermore, David Costa recommends that homeowners actually take time to read the fine print on their policies.

“It seems simple, and it is pretty simple. Home insurance is such an important part of protecting a home that homeowners really need to have a firm grasp on the extent of protection provided by their policies,” says lawyer David Costa. “Most importantly, homeowners should review and understand what the exceptions are in their policies, if any, and should make sure they are comfortable with these exceptions.”

The fact of the matter is that, based on a majority opinion, increased occurrences of extreme weather is here to stay for a while. That means there will be more insured filing for claims on property losses.The possibility of disputes between insurers and insured over claims and claim rejections will only increase in turn.

Providing a last word of advice, David Costa adds, “A dispute with an insurance company over a claim is never fun. But, homeowners should take comfort that, if needed, they can rely on legal support to have their interests communicated.” Lawyer David Costa continues, “Hiring a lawyer does not always have to entail a complete upfront cost. In some cases, lawyers will accept to be compensated on a contingency fee basis.”

This post was sponsored by Reputation.ca

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