Many gamble and opt for less coverage

Nelson Zandbergen
Farmers Forum

OTTAWA — Waterloo region horse farm owner Sandra Clark was shocked by her surging insurance bill, a hike of more than 45 % that her provider blamed on increasing extreme weather damage claims and uncertainty over the impact of tariffs on reconstruction costs.

Clark says that insurance coverage for her barn, riding arena and shed — all pole structures built within the last 26 years — already cost $5,500 after a $400 increase last year. Her insurer, Edge Mutual, wanted $8,000 for the next policy renewal effective Aug. 1. In return for less coverage and less service, Clark has managed to keep her bill at $5,500. She accepted the company’s offer to drop coverage for certain “perils,” such as snow load damage. She also opted to keep the replacement values on her buildings unchanged, rejecting the company’s recommended major increase in the book value of the barn, arena and shed.

In the event of a disaster she could potentially rebuild smaller structures with the existing values on file or take a 50 % payout and “walk away,” she said.

In a bulletin issued by the insurer and shared by Clark, Edge Mutual insists that its rate increase is “not motivated by profit” but is a “necessary and prudent measure to ensure the company has sufficient financial resources to respond to rising claims costs and rising reinsurance costs.” The company points to the strain of global weather-related catastrophes on the “worldwide reinsurance market,” adding that the insurance company buys reinsurance and its “pricing is influenced by these worldwide events.”

The company also points to the “devastating impacts” of recent weather-related damage in Ontario, including the central Ontario ice storm of 2025 and roofs that collapsed under snow load this past winter. “Within the first quarter of 2025 alone, Edge Mutual experienced more than half of the total claims that occurred in 2024. Heavy snow falls and spring ice storms resulted in two catastrophic loss events, incurring $15 million in claims from these two events alone.” Edge also counts the impact of tariffs among geopolitical factors raising reconstruction costs.

Clark sees it as just the latest example of escalating costs to strike her farm, which operates as a paid retirement facility for senior horses. In the same week that the insurer’s notice arrived, she had to shell out $4,000 for a new well pump. “My investment advisor asked me, when are you selling? Because it’s becoming unaffordable.”

“Horse farms are closing like crazy,” she said.

The rising cost of insurance is a significant burden for small businesses, particularly farms, according to Jasmin Guénette, Vice-President of National Affairs at the Canadian Federation of Independent Business (CFIB).

“It has been an issue for a couple of years now,” Guénette said. “When we ask our members what are the most important cost constraints that they are facing, the cost of insurance ranks very high.”

In CFIB’s monthly Business Barometer survey, insurance costs are currently the second-highest cost constraint for small businesses. Guénette noted that farm businesses are particularly affected due to the high value of their assets, such as buildings, equipment, and livestock.

John Taylor, president and CEO of the Ontario Mutual Insurance Association, which represents most of the mutual insurance companies in the province, explained that a combination of cost pressures is driving up insurance prices. Among them is the soaring cost of rebuilding, including compliance with the updated Ontario building code’s treatment of farm structures, Taylor said. The code change alone increased farm construction costs by “15 or 20 % or more,” he said. “You can’t rebuild what you had. You have to meet new standards, new configurations, and new designs.”

He also pointed to inflation in building materials and labor, exacerbated by supply and demand issues for skilled trades, as well as geopolitical factors like tariffs creating uncertainty in construction costs.

Both Guénette and Taylor highlighted the impact of frequent and severe weather events driving up claims. Guénette noted that the insurance industry has faced significant payouts, including nearly $1 billion incurred by the Jasper wildfire.

To mitigate rising premiums, some insurers are offering options like depreciated value coverage or the removal of specific perils like snow load damage.

Taylor explained that depreciated value policies, which recognize the lower value of older structures, are not new but may become more relevant again as a cost-saving option. It was only in the 1970s that full replacement value policies became the expected norm, he said. While depreciated value policies can lower premiums, they do leave policy holders on the hook for any shortfall in a total loss.

Guénette acknowledged this trend, stating, “It’s a strategy of the industry to keep their costs under control,” but warned that it forces small businesses to make tough decisions, akin to “playing Russian roulette with some part of your business.”