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Flood Insurance Not Available to Canadians
Published: 05/10/2010 by Donna Bradbury
Homeowner's insurance provides a critical element of protection against financial loss for any homeowner. It can cover your home and its' belongings if they are damaged or destroyed by disasters such as snow storms, tornados, or fires. But many homeowners do not realize that their standard homeowner's policy does not cover flood damage.
Flood insurance is not included in regular homeowner's insurance because most people do not live in places with high flood risks. It stands to reason that if one lives far from any bodies of water, that they should not be required to pay higher premiums to be covered in the unlikely event of a flood.
But even if you're not near a body of water, flooding is possible from melting snow or water running downhill. A flood is generally defined as water flowing overland and seeping into your house through windows, doors and cracks. Your home might be at risk for these occurrences but according to the Insurance Bureau of Canada, flood insurance is not available in this country.
Proprerty insurers don't offer stand alone flood insurance because they can't get a sufficient spread of risk between the reletively few high-risk properties that want coverage and the comparatively many low-risk properties that don't. As a result, policy premiums are just too high.
Most homeowner policies will cover water damage from a broken pipe, a hole in the roof and some sewage back-ups but you're advised to carefully read over your homeowners policy to know what's covered - and what's not. If you have any doubts then make sure to discuss any contract clauses with a qualified commercial insurance broker.
In the U.S., flood insurance covers the replacement value of a home and the cash value of its' belongings. There is a limit to how much they will pay on both. To compensate, some specialized insurance companies sell excess flood insurance. Coverage picks up where U.S. federal flood insurance leaves off. The additional protection covers the cost for any excess replacement value on a house and the cash value of qualified personal property.
In Canada, however, flood victims are out of luck if they look to their insurance companies for compensation. Consequently, the Insurance Bureau of Canada puts out regular bulletins reminding the Canadian public to take precautions and to move your valuables to higher ground and to do everything possible to drain water away from your house.
Things to Remember
JIB from Vancouver, BC - 05/19/2010 - 11:17 pm
Your title states that flood insurance is not available in Canada. This is true for homeowners, as you point out, but some commercial risks can purchase additional coverage to insure their business in the event of a flood. It is expensive but part of buying insurance is analyzing the risk and acting accordingly.
Homeowners should be aware that “water” coverage is a very complicated matter under most policies of insurance. It is never a straightforward matter and most people find out when they have a claim just how limited their policy can be.
Water damage from ruptured pipes is covered in most instances. The one major exception MAY be a rupture caused by freezing. If you are away from your home for longer than 72 hours during the regular heating season and your pipes freeze and there is a resulting “flood” your coverage will only be viable if you have either 1) drained your pipes and turned off the water or 2) made arrangements for your property to be inspected once every 24 hours by a competent individual. The idea is that a friend or neighbour will ensure that your heating is maintained and that if a pipe has frozen the damage will be limited. Or alternatively you have turned off the water so that no flood can occur. Unfortunately most people don’t realize this and only find out if they have a claim. A pipe left running for 3-4 days can cause a lot of damage.
Whether water seepage is covered depends upon a number of factors. Generally all ground water seeping into your home is not covered unless it is caused by a peril that is insured. So if it is wind driven or the wind creates an opening in your home that allows water to enter, it would be covered. If someone vandalises your home or deliberately leaves a garden hose running and the water from it that seeps into your home, it is covered. Ordinary ground water, from any source, that seeps into your home is generally excluded.
As for sewer back up coverage, most policies exclude this. You need to buy what is called an endorsement to add the coverage on. It isn’t too expensive and all companies sell the endorsement.
Even if you are a tenant you need to know that your property is not covered by your landowners policy and you need what is called tenants or renters insurance. You can add sewer back up to your policy as well. Even if you rent in a high-rise sewer back up coverage is a good idea, especially if your fellow tenants like to flush kitty litter down the toilet!
Your advice about speaking to an IBC sanctioned insurance broker is a good one. Most of us just buy the policy but don’t take the time to learn what we have purchased, until it is too late. It won’t cost you anything to see an insurance broker and ask a few questions. Most homeowners policies in Canada are now pretty standardized but they all offer endorsements that you can purchase to add extra protection.
