New Flood Insurance Options

As Albertans watched heavy rains continue to fall in spring 2013, many were unaware that their home insurance policies would not cover them for floods. Rising rivers reached record levels on June 13, 2013. The banks overflowed turning city streets into waterways. InCalgary, 26 neighbourhoods, particularly those near the Bow and Elbow rivers were on mandatory evacuation notice. Officials in 32 communities called a state of emergency. Five people died as a direct result of flooding and more than 100,000 people were displaced. Approximately 2,000 Canadian Forces troops were deployed to help with the disaster, which in the end caused more than $5 billion in damages.

These statistics likely fail to capture the real emotional toll of this extreme weather event.  Thousands of people experienced the complete loss of their home or had significant damage—none of which was covered by insurance. At the time, no insurance company inCanadaprovided homeowner coverage for overland water damage (e.g., water entering the property from overflowing rivers and heavy rain). The provincial and federal governments stepped in to provide financial relief and resources for devastated homeowners.

News coverage of this disaster brought an important issue to light for Canadians: even if they wished to purchase flood insurance, it was not available (although it was and is available in other G8 countries). The only type of flood coverage available would have been basic coverage for burst water pipes and sewer backup, although sewer backup insurance is typically an added cost. 

The Insurance Bureau of Canada, a national association representing private home, auto and business insurers, explains the issue on their website in 2015 from their perspective: “Overland flooding and seepage generally is not covered by home insurance because it is only a risk for the small percentage of the population who live in a flood plain. Since the purpose of insurance is to spread risk among many policyholders, flood insurance for those at risk would be unaffordable.”

Despite this reasoning, the public response to the Albertacrisis was such that a few insurers have decided to begin selling overland flood insurance. In February 2015, Aviva Canadaannounced that it would offer homeowners in Ontarioand Albertaan overland water endorsement. This protection would be part of the Aviva Water Protection package, which combines base policy water protection (broken water pipes and more), sewer back-up protection (the backing up or escape of water or sewage) and overland water protection (from water entering the property). The initial offering is now available to “most homeowners in Alberta”. For more information, visit http://floodinsurance.ca.

In May 2015, the Co-operators General Insurance Company announced it was launching new insurance coverage for overland flooding in Albertawith plans to make the product available across the country. A press release from the company stated that the coverage for Albertans would be an “inclusive and flexible” solution designed to protect homes against the most common causes of water damage: flooding caused by an overflow from a body of water, sewer/water backup and accumulation of surface water caused by heavy rain. For more information, visit http://www.cooperators.ca.

Along with scientists, insurance companies were on the leading edge of climate change research in the 1990s. Insurance companies are in the business of crunching the numbers to prepare for trends. Unfortunately, their dire climate change predictions are now a reality. The Insurance Bureau of Canada plainly states on their website that “Canada’s increasingly severe weather means that basement flooding and water damage are becoming more common.”

What can homeowners do, aside from using environmentally-friendly modes of transportation and swapping their wood stove for solar panels? It only takes a few inches of water in a home to cause thousands of dollars in damage. Consider these precautions:

  • Ensure proper lot grading. If possible, build up the ground around the house so water can drain away from basement walls.
  • Do not build driveways that slope toward the house.
  • Make sure downspouts extend at least two metres from the basement wall. Water should drain away from the house and neighbouring homes toward the street, backyard or back lane.
  • Use a rain barrel to catch water runoff.
  • Do not store valuable items in the basement.
  • Landscape with native plants and vegetation that resist soil erosion. 
  • Install backwater valves or plugs for drains, toilets and other sewer connections.
  • In the basement, raise these items above the floor: large appliances, the furnace, hot water heater and electrical panel.
  • Anchor fuel tanks to the floor to avoid a spill that could result in a fire. Make sure vents and fill-line openings are above flood levels. If using propane, contact the propane company before proceeding.
  • Install flood shields on basement windows and doors.
  • If flooding is imminent, shut off electricity at the circuit breaker.

When planning to buy a home, check into the elevation of the property in relation to nearby rivers and lakes. The Co-operators General Insurance Company also offers an excellent free online tool to determine the flood risk by location: https://water.cooperators.ca/assessment.aspx.

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