Rethinking Your Auto Insurance In A Changing Climate


Make sure you have the right blanket on a constantly warming planet

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Across Canada, temperatures are rising, precipitation is increasing and the risk of flooding continues to increase. These findings, published by the federal government in 2019 as part of Canada’s Changing Climate Report, offer a gloomy look at the future of our climate.


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For the insurance industry, the impact of climate change is probably best measured by the types of claims customers make the most. In home insurance, for example, weather and climate risks have replaced fire as the peril “that defines the relationship between homeowners and the insurance industry,” according to a 2020 report by Paul Kovacs, Principal Investigator at the Insurance Institute.

Drivers are also faced with climatic risks. Extreme weather conditions can potentially lead to expensive car repairs. As with homeowners, however, drivers can blow these costs down by making sure they have an auto insurance policy with the right coverage.

Types of auto insurance coveragefor weather-related hazards

To take their car on the road, drivers in Canada are required by law to have car insurance. The minimum amount of coverage that drivers must have (Liability coverage) varies from province to province, but generally this minimum coverage does not protect drivers against weather-related risks. (One exception: this rule does not apply to drivers Manitoba, where mandatory comprehensive coverage provides financial protection if your vehicle is damaged by hail and fire.)


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This means that you need to purchase additional coverage in addition to your basic coverage, to ensure that you are financially compensated in the event that your car is damaged by a weather event. Your coverage options are:

  • Full: This type of coverage provides financial protection when your car is damaged by an event unrelated to a collision, such as theft, vandalism, or environmental damage. As severe and unpredictable weather conditions become more frequent, putting your vehicle at risk for things like hail damage or fallen trees, this may be coverage to consider.
  • All perils: This coverage combines the advantages of full coverage and collision coverage, which provides compensation if you are the victim of a hit and run by an unknown driver, or if your car has been damaged in a collision with another car or a stationary object, such as a traffic sign.
  • Specified risks: This type of coverage will cover damage resulting only from the risks specifically listed in your policy. These hazards can include, but need not necessarily: lightning, hail, rising waters, windstorms, and fire.


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Of course, all types of coverage are subject to exclusions, limits and deductibles. Before committing to additional coverage, make sure you understand exactly how far your coverage goes and if it meets your needs.

How to choose the right coverage for your needs

In his report, Kovacs writes: “The most significant impact of climate-related risks for the insurance industry over the next 10 years will come from random extreme events that hit exposed and vulnerable properties and communities, resulting in loss and damage.

Since the 1980s, and after adjusting for inflation, the number of extreme weather claims paid by the Canadian insurance industry has doubled every five to ten years, writes Kovacs. He adds that recent “great loss events” include hailstorms, urban flooding, forest fires, tornadoes, high winds and residential flooding.


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The Insurance Bureau of Canada also reports that in 2020, bad weather caused $ 2.4 billion in damage – making last year the fourth highest level of insured losses since 1983.

While it looks like inclement weather is here to stay, that doesn’t mean every driver needs the same type of weather-related risk coverage. To determine what type of additional coverage you should get, or if you need additional coverage, you should ask yourself the following questions:

  • What types of severe weather or climate hazards are likely to occur in your area? Your policy should cover the risks that you are actually likely to face.
  • How much is your car worth? Most experts recommend removing extra coverage for cars if there isn’t a huge difference between a car’s cash value and the amount you would pay for the coverage plus the deductible. It may cost less to pay for repairs out of pocket.

As always, we recommend that you do your research, compare rates, and speak to specialists to make sure your insurance coverage meets your needs.

Lowest is a free, independent rate comparison website that allows Canadians to compare rates from over 75 providers for a variety of financial products, such as home and auto insurance, mortgages, and credit cards.


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