As Canada grapples with the pressing need to create 3.5 million more affordable housing units, experts are warning that addressing this issue without strategic planning could lead to new crises in the future.
Resilience Over Green Homes
While much of the housing crisis discussion revolves around constructing environmentally friendly or “green” homes, Craig Stewart, Vice-President of Climate Change and Federal Issues at the Insurance Board of Canada, emphasizes the importance of building “resilient” homes. Neglecting this aspect could pose insurance challenges down the road.
Stewart emphasizes that the manner and location of these homes must be carefully considered to avoid future challenges for homeowners. He stresses that the government’s plan to build 100,000 new homes through its Housing Accelerator Fund should prioritize extreme-weather resilience. Recent wildfires in British Columbia and the Northwest Territories highlight the increasing frequency of extreme weather events. Insurance claims resulting from such natural disasters have been on the rise since 1983, reaching $3.1 billion in 2022.
Climate Change and Insurance Challenges
Insurance providers attribute the increase in severe weather events, including wildfires, droughts, and extreme precipitation, to climate change. Stewart points out that these events are directly impacting insurance claims and costs.
A significant concern is that approximately six to ten percent of Canadian homes already have such a high flood risk that insurers won’t provide coverage. To address this, the government is considering the creation of a national flood insurance program. Uninsured homes could lead to financial burdens for homeowners who would have to cover damage costs themselves.
Moreover, homes in high-risk communities may lose value because potential buyers would be deterred by the risks associated with those areas.
Rethinking Home Locations
Kathryn Bakos, Director of Climate Finance and Science at the Intact Centre on Climate Adaptation, stresses the need for conversations about where homes are built. She advocates for avoiding construction in high-risk areas, floodplains, and “wildland urban interfaces,” where dense vegetation meets human settlements.
Impact on Insurance Providers
As insurance claims continue to mount, insurers are becoming cautious about non-resilient homes. In the United States, insurers are refusing property coverage in regions with high climate risk, such as Florida, Louisiana, and California. Bakos notes that these insurers have determined that the risk is too substantial to offer affordable premiums to cover the associated risks.
Canada’s Preparedness
Although the worst-case scenario is unfolding in the United States, experts believe that Canada is well-prepared to respond. Research and knowledge on how to address these challenges exist, making Canada better equipped to tackle climate-related housing issues.
Ensuring Resilient Homes
Homeowners concerned about their homes’ resilience can visit the Flood Ready or Fire Smart Canada websites for guidance. They can also consult their insurance providers to ensure their coverage matches potential risks.
Prospective homebuyers are advised to pay attention to factors such as location, construction quality, the presence of adequate sump pumps, elevation, and materials resistant to wildfires when choosing a home. These considerations are essential to avoid the stress and financial burden of home damage caused by floods, wildfires, or other natural disasters.
In addition to financial costs, such events can also have a significant impact on mental health, as they often involve displacement and extensive home repairs.
While Canada addresses its affordable housing crisis, experts emphasize the critical need for resilience in housing construction to mitigate future insurance and climate-related challenges.