The floods of 2013 prompted many insurance companies to reconsider flood insurance. In Alberta and/or Ontario, a few companies have already begun offering flood insurance. Others, such as Square One, have developed a nationwide solution that is currently available in provinces ranging from British Columbia to Quebec.
If you’re thinking about getting flood insurance, keep the following in mind:
Is flood insurance available in Canada?
This form of insurance was once uncommon in Canada, but the rise in natural flooding disasters as a result of climate change has changed that. While there is presently no national flood insurance policy, federal planning has begun.
How much does flood insurance cost in Canada?
More Canadians are opting for specialized insurance coverage as catastrophic floods become more regular, but costs may climb as insurers re-evaluate risk as a result of disasters like those currently occurring in British Columbia.
Overland flood insurance is distinct from standard homeowners insurance, which often only covers water damage caused by leaky pipes or leaking roofs. Flood insurance has only been available since 2015, a few years after catastrophic flooding in Calgary caused billions of dollars in damage.
According to the Insurance Bureau of Canada (IBC), flood insurance is becoming more popular, with approximately 50% of Canadians covered for overland flood insurance in 2020, up from 20% in 2017.
According to the agency, the great majority of Canadians may purchase overland flooding insurance for $100 to $300 per year, while those in higher-risk areas should expect to pay $500 to $1,000 per year. However, premiums are increasing as once-rare disasters such as the floods in B.C.’s lower mainland become more common.
“We’ve been tracking insurance payouts for severe weather events such as storms, fires, and floods since the 1980s,” said Aaron Sutherland, IBC’s vice-president of Western and Pacific.
“Whereas the industry used to pay out a few hundred million dollars per year for these claims, it now pays out more than $2 billion per year for claims related to climate change.”
Mr. Sutherland estimates that 5% of individuals in B.C. live in homes with such a high risk of flooding that insurance isn’t even available. Flood insurance costs typically peak at roughly $1,000 per year, after which it is no longer available, he said.
He went on to say that there were probably folks in the flooded Sumas Prairie area of Abbotsford who were uninsured because they fell under that high-risk category.
Flood insurance hasn’t been front of mind for many homeowners in the past, according to John Shmuel, managing editor of Ratesdotca, but consumers should critically evaluate any possibility of a flood when acquiring a home.
However, he noted that accessing that information in Canada can be problematic due to the lack of a national floodplain map and the fact that many of the maps accessible originate from the 1980s.
“You can’t buy a property and know if it was constructed on a redirected river or a previous floodplain,” Mr. Shmuel said, adding that potential homeowners should conduct their own study and contact with insurance agents before making a purchase.
“Most people don’t think about it when they’re looking for a home… but I wouldn’t make that mistake, especially given what we’re witnessing with so-called ‘once in a hundred-year’ events becoming much more often.”
Ian Lee, an associate professor at Carleton University’s Sprott School of Business, has witnessed the worst-case scenario in some of the villages surrounding the Ottawa River after it flooded.
“Prof. Lee added, “I’ve heard anecdotally that those homeowners can’t acquire flood insurance today there’s just too much risk.”
“Because they know they’ll be on the hook for some form of support for the homeowner, some communities have gone so far as to declare, “We’re not going to allow you to rebuild on a floodplain,” while others have said, “We’re going to rezone these places.”
He claims that the Canadian government is working on a national flood insurance policy for persons living in high-risk locations, but he doesn’t know what such coverage would entail or how much it would cost.
In the meanwhile, if customers are suffering increased costs, there are steps they may do to lower their rates.
Installing a sump pump (which can remove water accumulating in a basement) or a back-flow valve (which prevents sewage from going the wrong way out your pipes in adverse weather) can be a way of further protecting your house and lowering your premiums, according to Mr. Sutherland, because overland flood insurance is often paired with standard water-damage insurance.
If homeowners are strapped for cash, he says they can choose a greater deductible or a smaller maximum payout. While some insurance policies cover the whole cost of a home’s damage, others offer maximum reimbursements ranging from $25,000 to $50,000.
Finally, because insurance may send out an adjuster to verify your claim, collecting a settlement can take weeks to months, according to Mr. Shmuel. It’s critical, he explained, to get started on your claim as soon as possible.
“Mr. Shmuel said, “You want to keep track of everything that’s been destroyed, as well as any invoices you have.”
“Whether you’ve been in a vehicle accident or your basement has flooded, the sooner you file a claim, the better.”
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Can you get flood insurance in a flood zone Canada?
The new maps, which were completed in early 2016, are now being used by insurance companies to assess flood risk for both fluvial flooding (flooding caused by excessive rainfall over a long period of time causing a river to overflow its capacity) and surface water flooding (flooding caused by heavy rainfall that occurs independently of an overflowing body of water).
These new maps, which aren’t yet available to the public, show that 20% of Canadian families are in high-risk zones, with 10% of those in very high-risk areas.
Despite the attention paid to the devastation caused by forest fires, property flooding is Canada’s biggest source of natural disaster. As a result, make sure to check your homeowner’s insurance policy to see if flood damage is covered.
Insurance might be a lifesaver if you live in a flood zone. Examine the following flood statistics as you consider the need for flood insurance:
Flash floods can produce walls of water ranging in height from 10 to 15 feet (3 to 5 meters) rushing toward your home.
A vehicle can be carried away in two feet (about two-thirds of a meter) of flowing water, which is a terrifying prospect if you’re inside.
A few inches of water in your home can inflict thousands of dollars in damage. If your insurance doesn’t cover it, you’ll have to pay for it yourself.
Hurricanes, winter storms, snowmelt, and strong rains that don’t drain well can all create flooding.
Don’t underestimate the potential for flooding to inflict damage. Check to see if it’s anything you, as a homeowner, need to take care of before it’s too late to save your home.
Can you get insurance for flooding?
Flood insurance is included in most regular house insurance policies and protects you from flood-related damage and losses.
If you file a successful flood damage claim, your insurer will reimburse you for the cost of repairing or rebuilding your house, as well as the cost of replacing any destroyed property covered by your policy.
Does home insurance cover natural disasters in Canada?
Natural calamities are covered by house insurance. Yes, most standard home insurance policies in Canada cover any of the following natural disasters: Extreme weather is frequently covered by a home insurance policy, as are contents insurance claims for your belongings: Forest fires (which helps with home fire insurance claims)
Can I get flood insurance in BC?
CapriCMW specializes in Flood Insurance and Overland Water Coverage in British Columbia. As an Overland Water Endorsement, this coverage can be added to most current house insurance policies and is the greatest method to protect yourself from tragic financial loss due to flooding.
Does house insurance cover flooding in BC?
Home insurance coverage in Canada have traditionally not covered loss or damage caused by catastrophic floods, such as that saw in B.C., whether caused by sewer backups or natural water coming into the house.
What is overland water coverage?
Although standard property policies may cover basic water-related hazards like broken pipes and sewer backups, there has previously been no coverage available in Canada for water entering and destroying a property “overland.” Water accumulation from severe rain, spring run-offs, or overflowing rivers and inland bodies of water can all contribute to this.
According to a 2014 analysis from Statistics Canada, average temperatures in Canada have risen by 1.6 degrees Celsius during the last 67 years. According to the agreements adopted at the 21st Conference of the Parties (COP21) in Paris, France, global temperatures will rise by a minimum of 1.5 degrees Celsius and most likely 2 degrees Celsius or more by 2100 as a result of global warming. Even the most pessimistic climate change estimates will almost certainly result in wetter, more unpredictable, and more intense weather across the country, which will only become worse as more carbon accumulates in the atmosphere.
The flooding in Southern Alberta in 2013 highlighted a gap in standard insurance policies regarding compensation for property damage caused by overland water. The cost of the Alberta floods alone was projected to be $2.2 billion, with an estimated 100,000 families affected. Other recent floods, such as the $940 million in damages in 2013 Toronto, Ontario, and the $1 billion in damages in 2014 Southern Manitoba, only served to bolster the need for overland water coverage. It’s easy to understand the hardship you’d face if you had a loss and no appropriate coverage was available water damage can be devastating. With the exception of Quebec, Aviva Canada and RSA now offer overland water coverage in all provinces in response to this risk. Overland water coverage will be available from Intact/Novex for new business beginning in February 2016 and for renewals beginning in April.
Water Coverage Available
Most insurance companies divide their water damage coverage into three parts:
- Basic Coverage – Provides protection against losses caused by unforeseen incidents such as burst water pipes, overflowing bathtubs, and broken/leaky aquariums. Basic water coverage is normally included in your home insurance policy, however coverage for burst water pipes may be contingent on your house being checked on a regular basis or on the water being shut off and pipes being emptied if you are gone for more than four days.
- Sewer Back-up and Sump Pump Coverage Provides coverage for losses caused by water or sewage backing up into sewers or drains leading to sewers. Water must not enter the property via an overland source, according to the coverage restriction. This coverage is normally available for an extra fee to existing property policyholders.
- Overland Water Coverage Provides general coverage for loss or damage caused by water entering a property as a result of heavy rains, spring run-off, or overflow from lakes or rivers, and is widely available to practically all homeowners, condominium owners, and tenants. The cost of this coverage will vary depending on the risk profile of particular properties, but it is likely that insurance for many homes will be inexpensive. The only exception is if you live in a known flood area, in which case your insurance costs will be higher.
Conclusion
For most people, their home is their most precious possession, therefore it only makes sense for them to take reasonable safeguards to safeguard their investments.
In the past, large floods have accounted for over 40% of all natural disasters that have occurred in Canada. Recent occurrences and statistics demonstrate that homeowners should be even more concerned about overland water. In the face of a growing danger of loss from overland water damage, homeowners should look into coverage options and determine whether the cost is reasonable for their situation.
Do I need overland water coverage?
Water coverage overland is an optional feature. This implies it isn’t covered by standard home insurance coverage. It often covers loss or damage to your home and/or personal goods caused by fresh water seeping in through your ground-level windows and doors, depending on the provider. Fresh water can come from rivers or lakes, as well as strong rain, spring run-off, or melting snow or ice.
What if I told you that We routinely use the term “flood” in casual speech to refer to general water damage in our homes. However, in the insurance sector, flood refers to damage produced by coastal water (saltwater), tsunamis, waves, and tidal waves, rather than fresh water. Home insurance coverage do not cover this type of loss.
Is my house prone to flooding?
The Federal Emergency Management Agency, or FEMA, provides a tool that allows you to quickly determine whether your home is in a flood zone. The Flood Map Service Center displays information such as flood zones, floodways, and the risk level of your residence.
There’s also information on levees, coastal barriers, and the base flood line, as well as topographical and infrastructure data. The map may appear confusing at first, but it is lot easier to interpret than it appears.