Cut lumber and stacked trees at an industrial sawmill in Elk Lake near Timmins, Canada, May 6, 2024. President Donald Trump’s tariffs have ignited a sense of economic anxiety and anger among Canadians about how they are being treated by their neighbor, ally and best customer.Ian Willms/The New York Times News Service
Canadian homeowners can expect to face higher premiums when they renew their home insurance, as new U.S. tariffs add pressure on property and casualty insurers by raising the cost of building materials and appliances.
On Tuesday, U.S. President Donald Trump implemented across-the-board tariffs of 25 per cent on Canadian and Mexican imports, with separate tariffs on steel and aluminum starting on March 12. Canada responded swiftly with tariffs of its own across a number of U.S. imports.
The tariffs placed by Mr. Trump on building materials such as aluminum, steel and lumber will add extra costs for insurers to the goods used in replacing and repairing homes, cars and businesses, Brett Weltman, spokesperson for the Insurance Bureau of Canada, said to The Globe and Mail.
“While we don’t yet have a precise picture of the scope of these effects, over time, tariffs will hurt consumers and families on both sides of the border,” he said in an e-mail.
Construction costs are one factor used by insurers when determining premiums. In recent years, home-insurance premiums have been trending higher as natural disasters have become more frequent and more severe. Across Canada, premiums rose by 5.28 per cent as of January, 2025, compared with the year prior – well above general inflation levels of about 1.9 per cent, according to data by MyChoice, a digital insurance company in Canada.
Last year, the Canadian insurance industry paid out $8.5-billion in damages for natural disasters, triple the costs recorded the year prior. Now, as the industry prepares for the coming wildfire season, the trade war with the United States could create another ripple effect for homeowners who are already facing premium hikes because of climate change.
Bill Premdas, executive director of KPMG’s Canadian insurance practice, said a prolonged tariff battle with the U.S. could put pressure on claims costs as many of the resources used to rebuild and repair homes are covered by cross-border trade agreements. In addition to steel and aluminum, this could also include appliances, furniture and carpets that may be subject to retaliatory tariffs.
“The impact of cost increases to service insurance claims would challenge profitability under current premium rates, and there could be inflationary pressures for insurers to increase premiums in response to the higher claims costs,” he added in a KPMG report.
Rising premiums could also happen more quickly for homeowners, Mr. Premdas added, in comparison with auto insurance, where increasing rates requires regulatory approval.
The industry has not yet given estimates on the cost increases homeowners will face.
However, Mr. Weltman said the initial analysis indicates tariffs “could impact all lines of property and casualty insurance,” with auto insurance “likely to be more impacted” because of tariffs on vehicles and parts. (On Wednesday, Mr. Trump extended a one-month tariff exemption to the Canadian auto sector.)
But both home and auto insurance face uncertainty on how long the trade war could last, along with the potential layering of tariffs and what that means for premiums, said Chris Cornell, a partner and national leader at KPMG’s insurance practice.
“The layering of the tariffs is a significant issue. If you think about steel and aluminum, you have the initial tariff that’s coming in, and then potential reciprocal tariffs could come through in April as well,” Mr. Cornell said in an interview. “So that uncertainty is just compounded.”
IBC’s Mr. Weltman said Canadian insurers are working to mitigate tariffs by seeking alternatives for American goods in their supply chains.
Canada’s largest property and casualty insurer, Intact Financial Corp., insures close to three million homeowners in Canada. Spokesperson Caroline Audet said building materials account for a third of the total costs of property insurance for homes and businesses. The other two-thirds include things such as labour, temporary relocations and business interruptions for commercial insurance.
Currently, about 25 per cent of materials are sourced from the U.S.
“That means that only approximately 8 per cent of total costs would be potentially exposed to the proposed tariffs, so we are confident that the overall impact on our business would be limited,” Ms. Audet added.
During a recent call, Intact chief executive Charles Brindamour told analysts that the company has spent the past month working with suppliers to ensure they have “as much Canadian content as possible.”
Intact chief operating officer Patrick Barbeau said on the same call that the remaining 75 per cent of materials used in property insurance are sourced and manufactured in Canada.
“And we have opportunities to further reduce the usage of U.S.-manufactured goods at On Side and within the supply chain,” he added. (On Side is Intact’s in-house restoration company.)
Co-operators spokesperson Keren Adderley said that while some price adjustments are expected to occur as early as 2025, the full effect may not be realized until next year, with forecasts indicating continued cost pressures over the next few years.
“The insurance industry is bracing for the potential of increased claims costs across all property types, including commercial, farm, and homeowner policies as we expect the tariffs to drive up the cost of materials, labour, and services,” Ms. Adderley said in an e-mail.
IA Financial spokesperson Chantel Corbeil said the tariffs “can indeed influence” home-insurance policies in Canada because of potential increases in costs for materials and goods. However, she added, not all materials or goods will be affected by the tariffs, and labour costs are anticipated to remain stable.