Are Insurance Policies Getting More Restrictive in Canada in 2026?

Many Canadians are asking the same question as they review their renewals or experience claim delays: Are insurance policies getting more restrictive in 2026?

The short answer is yes — but not in the same way across all policies. In Canada, insurers are tightening coverage through more detailed underwriting, narrower policy wording, added exclusions, and stricter claims interpretation. These changes are largely driven by rising loss costs, climate-related events, regulatory pressure, and the growing use of data and automation.

This article explains how and why insurance policies are becoming more restrictive in Canada, what policyholders should watch for in 2026, and how to stay properly protected.

Why Insurance Policies Are Changing in Canada

Canadian insurance has historically been conservative and stable. However, several pressures are reshaping how insurers manage risk:

• Increased frequency of severe weather losses
  
  
• Higher construction, repair, and replacement costs
  
  
• Rising liability claims and legal costs
  
  
• More detailed data and analytics in underwriting
  
  
• Regulatory scrutiny around solvency and fairness
  
  

Rather than raising premiums alone, insurers are increasingly adjusting policy terms and conditions to better control exposure.

What Does “More Restrictive” Actually Mean?

When people hear “restrictive,” they often assume coverage is disappearing. In reality, most restrictions come from how coverage is defined, not whether it exists at all.

In 2026, restrictions typically show up as:

• Narrower definitions of covered perils
  
  
• More specific exclusions
  
  
• Higher deductibles for certain risks
  
  
• Additional conditions to maintain coverage
  
  
• Reduced flexibility for higher-risk properties or activities
  
  

Understanding these changes requires looking closely at policy wording — not just premiums.

Property Insurance: Tighter Conditions and More Exclusions

Climate-Related Restrictions

One of the biggest drivers of policy restriction is climate risk.

Insurers are increasingly:

• Limiting coverage for overland flooding
  
  
• Applying higher deductibles for wind, hail, or wildfire
  
  
• Requiring mitigation measures to maintain coverage
  
  

In some cases, coverage is still available — but only if specific conditions are met.

Maintenance and Property Condition Requirements

Policies are becoming more explicit about:

• Roof age and materials
  
  
• Plumbing and electrical updates
  
  
• Heating systems and winterization
  
  

Failure to maintain a property can now more easily lead to partial or full claim denial.

Liability Insurance: More Scrutiny, Higher Standards

Liability claims are rising across Canada, particularly for bodily injury and property damage.

As a result:

• Insurers are tightening definitions of negligence
  
  
• Some liability extensions are being removed or capped
  
  
• Higher liability limits may be required for certain risks
  
  

Policyholders may still have liability coverage — but with less tolerance for ambiguity.

Auto Insurance: Narrower Interpretation, Not Less Coverage

Auto insurance remains heavily regulated at the provincial level, but restrictions still appear in subtle ways.

In 2026, drivers may notice:

• More detailed scrutiny of usage and driver behaviour
  
  
• Tighter rules around unreported drivers
  
  
• Increased documentation requirements after claims
  
  

Coverage hasn’t disappeared — but insurers are enforcing conditions more strictly.

Commercial Insurance: Less Flexibility for Small Businesses

Commercial policiesc are seeing some of the most noticeable tightening.

Common changes include:

• Narrower business interruption definitions
  
  
• Reduced coverage for contingent losses
  
  
• More exclusions tied to cyber incidents or supply chains
  
  

Insurers now expect businesses to clearly understand and manage their risk — not rely on broad policy language.

Claims Handling: Stricter Interpretation of Policy Wording

One of the biggest frustrations for policyholders is the perception that claims are harder to settle.

In many cases:

• Coverage hasn’t changed
  
  
• Interpretation has become stricter
  
  

Claims decisions in 2026 rely heavily on:

• Exact policy wording
  
  
• Documented maintenance and compliance
  
  
• Evidence supporting the cause of loss
  
  

This makes policy clarity and documentation more important than ever.

Are These Changes Permanent?

Not necessarily — but they are unlikely to reverse quickly.

Insurance is cyclical. However, the current tightening reflects structural risk changes, not short-term market corrections.

Key factors likely to persist:

• Climate volatility
  
  
• Data-driven underwriting
  
  
• Regulatory pressure on insurer stability
  
  

This means policyholders must adapt by staying informed and proactive.

How Policyholders Can Protect Themselves in 2026

Even as policies become more restrictive, coverage gaps can often be avoided.

Best practices include:

• Reviewing policy wording annually
  
  
• Asking questions about exclusions and conditions
  
  
• Updating insurers when property use changes
  
  
• Maintaining properties to underwriting standards
  
  
• Working with licensed insurance professionals

Restrictions are most harmful when they come as a surprise.

The Role of an Insurance Broker in a Restrictive Market

As insurance policies become more detailed and technical, professional guidance becomes more valuable.

A broker helps:

• Interpret policy language
  
  
• Identify hidden exclusions
  
  
• Compare coverage options across insurers
  
  
• Advocate during claims
  
  

This role is especially important when coverage is tightening rather than expanding.

Final Thoughts

Insurance policies in Canada are becoming more restrictive in 2026 — but not without reason. These changes reflect higher risk, increased losses, and a more data-driven insurance environment.

For policyholders, the solution isn’t fear or avoidance. It’s understanding, review, and proper advice.

Talk to Ron Johnston Insurance

If you’re concerned about how policy changes may affect your coverage, the team at Ron Johnston Insurance can help you review your policies, understand exclusions, and ensure your protection aligns with today’s insurance environment.

Contact Ron Johnston Insurance to discuss your coverage and get clarity before a claim ever happens.

Frequently Asked Questions: Insurance Policy Restrictions in Canada

Are insurance policies actually more restrictive in Canada in 2026?
Yes. Many policies now include more detailed wording, clearer exclusions, and stricter conditions, even if coverage types remain the same.

Why are insurers tightening policy wording instead of just raising premiums?
Insurers use tighter wording and exclusions to control risk exposure, especially as climate losses, repair costs, and liability claims increase.

Does restrictive policy wording mean coverage is reduced?
Not always. Coverage may still exist, but it is applied more precisely, with less flexibility and stricter interpretation during claims.

Are exclusions becoming more common in insurance policies?
Yes. Insurers are adding or clarifying exclusions related to climate risk, maintenance issues, cyber incidents, and high-risk activities.

Are claims harder to get approved in 2026?
Claims are often reviewed more closely. Documentation, maintenance records, and exact policy wording play a larger role in claim outcomes.

Which types of insurance are most affected by restrictions?
Property, liability, and commercial insurance policies are seeing the most noticeable tightening, especially in higher-risk categories.

How can policyholders avoid coverage gaps?
Review policies regularly, disclose changes promptly, maintain properties, and ask questions about exclusions and conditions before renewal.

Can an insurance broker help with restrictive policies?
Yes. Brokers help interpret policy wording, compare insurers, and identify coverage gaps before a claim occurs.