Insurance challenges take centre stage in heritage designation debate

In a town known for its history, it is not surprising that some residents want their homes designated as heritage properties, to commemorate their significance and protect them for future generations.

That desire led to shock for a handful of Old Town homeowners after they learned the insurance costs tied to designation could be a major problem.

Two of those owners, Barbara Worthy and Jim Reynolds, went before Niagara-on-the-Lake town council in the fall to share that insurance companies would not give them adequate coverage if their properties received heritage designation.

The problem has widespread implications, with 198 properties in NOTL being on the municipal heritage registrar, according to a town report to the municipal heritage committee authored last year.

The issue was at the centre of a report that came before the municipal heritage committee at its first meeting of the year on Jan. 14.

The big takeaway in the report is that heritage designation itself does not affect insurance coverage; however, factors related to it, including the building being built before 1940, could impact whether a property gets coverage.

The town quoted the following statement from the Ontario government in its report to the municipal heritage committee: “Insurance premiums should not go up because of a heritage designation. Some companies do not insure buildings over a certain age, but designation itself does not place additional requirements on the insurer and should not affect premiums.”

The town also issued template letters for residents to send to insurance companies asking them to confirm that a heritage designation does not affect the price of their insurance. It said it will continue to consult with residents and the Insurance Bureau of Canada to make sure concerns are assuaged.

So, what is behind the issue? Industry experts say several factors, namely high reconstruction costs, make insurance coverage more difficult and expensive for people in places like Old Town.

“A heritage home’s replacement cost (what it would cost to rebuild) includes repairs that may involve specialty contractors and building materials,” said Brett Weltman, manager of media relations with the Insurance Bureau of Canada, in an email.

“All of this, and several other factors, are factored into the price for insurance for a heritage home. With heritage homes, it is the age of the building, electric, plumbing (and the list goes on) that is of interest to insurers; not whether or not it has a heritage designation.”

Weltman also pointed to an Insurance Bureau of Canada pamphlet that lists other factors affecting heritage properties, including longer bureaucratic timelines, more specialized professional assessments, stricter bylaws — such as requirements to rebuild on the original site — and longer claims settlement periods.

Even insurers find the specialized nature of heritage properties challenging.

Worthy raised that concern during a November council meeting, saying it was “really scary” how little the insurance companies she contacted understood the heritage insurance market.

The Lake Report contacted 12 Canadian insurance companies to discuss their practices regarding heritage properties. None agreed to an interview, though some cited a lack of expertise as a reason why they did not want to do one.

“I consulted with our home insurance team and they do not feel we have the level of specialization and client base in heritage designated properties that is needed for this conversation,” said Keren Adderley, senior communications consultant at Co-operators Insurance.

Nadia Matos, manager of external communications at the Canadian Automobile Association, offered a similar response.

“I have spoken to a few people in the insurance company and since we don’t really focus on this area, we would refer you to Insurance Bureau of Canada, who maybe able to help.”