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Why don’t insurance companies discount green upgrades?

by Neil Sharma on 27 Aug 2021

Green home upgrades are growing in popularity, but anyone expecting a break on their home insurance premiums as a result might have to hold their breath a little longer.

Insurance companies are always evaluating risk but that becomes difficult when the sample size is paltry. Justin Thouin, co-founder of LowestRates.ca, which released a report on the subject, told CREW that while Canadian homeowners should consider making efficiency upgrades, depending on what they are, insurance companies will struggle predicting whether or not they will reduce the risk of future claims.

“If people use solar power or do things to reduce gas emissions, things that will improve long-term climate change and reduce things like wildfires and hail storms—catastrophic events—that will eventually allow insurance companies to charge less because they spend billions of dollars on catastrophic events, however, it’s difficult for companies to assign risk reduction for someone who puts a solar panel on their house.”

That isn’t to suggest that green home upgrades aren’t worth pursuing. For example, high-ratio mortgage holders can benefit from a Canada Mortgage and Housing Corporation premium refund of up to 25% if they buy or build an energy efficient home, or even if they make the according renovations themselves.

Still, those savings won’t come through typical home insurance but rather mortgage loan insurance, says Thouin, but there are ways to accrue savings.

“If you install energy efficient pipes and plumbing systems to use water more efficiently, i.e. less water, it will reduce the risk of cracks, leaks and poor water quality, which lowers the risk of flooding in your home, therefore, the insurance company will lower your insurance,” said Thouin.

Nevertheless, it might be a while yet till insurance companies begin discounting green upgrades to homes, and Thouin believes one way to get the ball rolling is through government intervention.

“When it comes to green rebates, it’s really going to have to be a partnership between government and insurance companies working together,” he said. “It’s going to take some time to have enough individual dwellings to make catastrophic events happen less frequently, and until then perhaps the government can provide insurance companies with subsidies they could pass along to individuals who install green energy efficient improvements to their homes.”



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