Vancouver, B.C. (Jun. 24, 2013) – Earlier this month, cities across Germany were challenged by flooding. Now several Canadian cities, including those in Alberta, are facing the same challenge. You might be wondering if home insurance policies cover flood damage. Many think “Acts of God” are excluded from home insurance policies. This is not the case. No home insurance policy specifically excludes “Acts of God”. That said, whether or not your home insurance policy covers flood damage depends on where you live.
Some countries have mandated that flood coverage be included in all home insurance policies. Others have government operated flood insurance programs that people can opt to participate in. And yet others, including Canada, do not offer flood insurance programs; instead, the federal and provincial governments provide some amount of financial assistance.
It’s important to note that flood damage is distinct from water damage. More specifically, flood damage means loss or damage caused by surface water originating from rain, snow, overflowing rivers, lakes, and other bodies of water. Most home insurance policies in Canada provide some form of coverage for water damage.
There are several reasons why flood insurance is not available in Canada. The two most notable reasons are described below.
- Since flood insurance is not a mandatory coverage in all Canadian home insurance policies, providers are concerned that they would face adverse selection. That means only people who had a high risk of flood damage would purchase the insurance.
- In most cases, governments have widespread knowledge that specific areas are susceptible to flood. As such, zoning these areas for residential development, without first investing in proper infrastructure, means it’s only a matter of time before flood damage would occur.
In both situations, it is virtually impossible for home insurance providers to obtain enough premiums to cover potential losses from flood damage.
So, what do you do if your home suffers flood damage? As mentioned earlier, you may be eligible for financial assistance from the government. The BC Disaster Financial Assistance Program, for example, will pay 80 percent of the amount of total eligible damage that exceeds $1,000, to a maximum claim of $300,000. Links to the programs available by province are provided below.
- B.C. Disaster Financial Assistance Program
- Alberta Disaster Recovery Program
- Saskatchewan Provincial Disaster Assistance Program
- Manitoba Disaster Financial Assistance Program
- Ontario Disaster Relief Assistance Program
- Quebec Financial Assistance to Disaster Victims Program
- Newfoundland and Labrador Disaster Financial Assistance Program
- Prince Edward Island Provincial Disaster Assistance Arrangements
- New Brunswick Disaster Financial Assistance Program
- Nova Scotia Disaster Financial Assistance Program
- Yukon Disaster Financial Assistance Arrangements
- Northwest Territories Disaster Financial Assistance Program
- Nunavut Disaster Financial Assistance Program
About Square One Insurance
Established in 2011 and based in Vancouver, British Columbia, Square One Insurance offers the only à-la-carte home insurance policy in Canada. That means you only pay for the protection you need. Square One Insurance is also one of the few providers to automatically include earthquake and broad water protection in its policy. No paying extra. For more information about Square One, or to get an online quote, visit www.squareoneinsurance.ca.
SOURCE: Square One Insurance Services Inc.