Skip to main content
Mindful of home insurance costs when purchasing a seasonal/vacation/secondary property in either the US or Canada.

Exploring the impact of US national catastrophes on Canadian home insurance

When natural catastrophes, including hurricanes, wildfires and severe storms, hit the US, their effects don’t stop at the border. While Canada and the US operate as separate insurance markets, they are closely linked, especially when it comes to reinsurance and financial risk.

For Canadian homeowners, including those with seasonal properties, understanding these connections is essential. Let’s take a look at how US catastrophe losses can influence the Canadian residential insurance landscape.

A connected insurance marketplace

Although the US and Canada have distinct insurance industries, our two worlds are closely connected in the insurance market. Here’s why:

  • Many of our insurance companies have Canadian operations; however, they are often much larger in the US. An example of this would be Chubb, which is an American company with operations in Canada, but their volume and scale are significantly greater in the US.
  • Canadian insurers rely on reinsurance markets that operate globally. Reinsurance helps insurers manage financial risks, but it also imposes capacity restrictions that affect availability and pricing in Canada.

What is reinsurance?

Reinsurance can be described as multiple insurance companies sharing risk by purchasing insurance policies from other insurers, so that no single insurance company bears the full financial burden of a major disaster.

Essentially, reinsurance is a behind-the-scenes safety net that keeps the insurance system stable, even in times of crisis. But since reinsurance operates globally, losses from disasters in one country (like the US) can lead to higher costs for insurers everywhere, including Canada.

How US natural catastrophes influence Canadian insurance costs

The US is one of the largest insurance markets in the world, and when a major catastrophe strikes, it puts immense financial pressure on global reinsurers. Since reinsurers spread risk across multiple regions, large-scale losses in the US — such as the recent devastating wildfires in California, which have resulted in insured losses reaching an estimated $30 billion USD ­— deplete their reserves.

It can cause somewhat of a domino effect: If reinsurers are paying out more than ever, they will need to increase their rates, and these cost increases will ultimately trickle down to Canadian insurers, even though the losses originate in the US.

The impact on seasonal properties in Canada and the US

For Canadian homeowners with seasonal or secondary properties in either the US or Canada, the effects of US natural catastrophes can be even more pronounced. They can include:

  • Capacity constraints: Insurance companies must manage their risk concentration in specific areas to manage their exposure to catastrophic events. If a company requires reinsurance in a specific region to meet regulatory requirements and ensure profitability, they may have limited capacity available for Canada if their exposure in the US has already increased. For example, if they have exceeded their reinsurance capacity for wildfires in the US, it will become more difficult to secure additional reinsurance for similar wildfire risks in Canada. This limitation directly impacts underwriting decisions, making it harder for insurers to offer coverage for seasonal properties in high-risk areas.
  • Risk tolerance: If an insurer is already heavily exposed to a particular peril, they may be less willing to provide additional coverage in other areas across the continent.
  • Coverage limitations: In response to large-scale natural catastrophe losses, insurers may modify policy terms to limit their exposure while still providing coverage. For example, they may introduce a wildfire deductible in the US, which could then be applied to Canadian policies, as well. This could lead to higher deductibles, reduced coverage or even non-renewals for certain risks.

How Canadian homeowners can mitigate risk

As insurance costs continue to rise due to natural disasters across North America, Canadian homeowners can take proactive steps to mitigate risk and potentially reduce their premiums. Implementing the following risk-reduction measures can help reduce claims, allowing insurers to allocate more capital to cover catastrophic losses such as wildfires, hailstorms and wind events:

  • Install water detection systems to prevent costly water damage.
  • Build homes with fire-resistant materials, such as stucco or fibre cement siding.
  • Clear snow and ice from roofs and pathways to minimize structural damage and liability risks.
  • Implement monitored alarm systems for fire and security threats, reducing the likelihood of loss.

By adopting these measures, homeowners not only protect their properties, but also contribute to the overall stability of the insurance market, helping keep costs in check.

How Signature by Acera Insurance can help

Securing insurance for Canadian-owned properties in the US requires a strategic approach, especially in high-risk areas. By working with experienced brokers who have strong local relationships and deep expertise, Canadian homeowners can find tailored solutions even as the market evolves. While premiums, availability and underwriting standards continue to shift, proactive planning and expert guidance can help ensure the right coverage is in place.

Signature by Acera Insurance has a skilled team that works closely with insurers to provide risk mitigation solutions, offering insureds a proactive approach to risk management. By educating our clients, Signature can equip them with the tools and resources necessary to reduce losses that they can control, ultimately helping to keep insurance costs more manageable. Utilizing solution-oriented, well-educated brokers — rather than just order takers — has never been more important for successful clients. Signature’s clients require creative solutions in both admitted and non-admitted markets to secure the protection they need.

It is also critical to educate clients on the impact of claims. Many policyholders are unaware of how frequent claims can lead to uninsurability. In today’s changing insurance landscape, clients must understand the full picture of insurance, beyond just the price. Signature focuses on helping our clients grasp the “why” behind our recommendations so they can make informed decisions about their coverage.

To learn how Signature by Acera can protect you, connect with an Advisor today.


Information and services provided by Acera Insurance, Acera Benefits and any other tradename and/or subsidiary or affiliate of Acera Insurance Services Ltd. (“Acera”), should not be considered legal, tax, or financial advice. While we strive to provide accurate and up-to-date information, we recommend consulting a qualified financial planner, lawyer, accountant, tax advisor or other professional for advice specific to your situation. Tax, employment, pension, disability and investment laws and regulations vary by jurisdiction and are subject to change. Acera is not responsible for any decisions made based on the information provided.