Water Damage Due to Floods, and Insurance

Toronto, ON (Apr. 25, 2014) – It is Spring in Canada. The long winter left lots of snow. Warm weather causes melt and rain adds to the run-off; that causes floods. Heavy rains by themselves anytime can trigger the same floods – remember Alberta or Toronto in 2013. Floods cause lots of damage to roads and other infrastructure; they bring water into places where it is not wanted, like buildings. A newly renovated family room in a basement with in-home theatre, now half full of water, is not a pleasant sight. After the water leaves, the sight gets even worse.

You may think insurance will come to the rescue. But let’s look a little more closely at what’s insured by that policy.

Water damage: If the water that has caused the damage has come into the building as the result of a hole caused by something that is insured against like a falling branch or tree putting a hole in the roof or wind breaking a window, and the rain came in, then the damage is usually covered. That’s not the case here.

“I added coverage for water and sewer backup to my policy”: The municipal sewer system became overloaded and water came back through the sewer system into my basement. Because I had added the optional coverage, damage would be covered. Again, not this case.

Overland flooding: A flood, according to the Insurance Bureau of Canada, is defined as water flowing overland and seeping in through windows, doors and cracks. Insurance for loss caused by overland flooding is not available with any Canadian insurance company.

“Gee, I didn’t know that.” You are not alone. Research by the Insurance Bureau of Canada found that 61 per cent of Canadians believe their home insurance covers them in case of overland flooding. Perhaps a case of wishful thinking?

The remaining types of losses due to water damage are still huge notes Aviva Canada, one of Canada’s larger property insurers With the 2013 storms, 51% of all Aviva Canada property claims were for water damage, an all-time high. Even with the two largest events – Alberta and Toronto – removed, water damage claims were still 40%.

Yes, it seems climate change is happening and one of the effects of that is more frequent and more severe weather incidents. It would seem likely then that there will be more damage, and more insurance claims in the future.

Are you buying a house or other property, or already own one? Be aware of the risks to your property and manage them accordingly. Insurance is a good tool to help manage those risks appropriately, but unless you understand what risks insurance is and is not helping you with, then you could get caught short. Good advice can be worth its weight in gold – seek it out.