Other than flooding from burst pipes or appliances gone haywire, water damage isn’t included in standard home insurance policies. And we only have to look back to the southern Alberta flood in June 2013, the torrential downpour that hit Toronto the following month, and even a run-of-the-mill blocked sewer line to know water damage adds up quickly.
Homeowners have long been able to buy an endorsement (an amendment) on their home insurance policy to cover sewer backup damage. And recently, some insurance companies added overland water endorsements to include damage from exterior freshwater floods, like rising river levels, storms, and overflowing downspouts. Coverage for saltwater flooding and tsunami damage isn’t available.
At Aviva Canada and RSA, customers can choose between a simple endorsement for sewer backup, sump and septic tank damage, and a comprehensive endorsement that includes sewer backup and freshwater floods. The Co-operators only offers a comprehensive endorsement. At Square One Insurance, the comprehensive endorsement is automatically a part of all eligible policies. You can’t, however, only buy an endorsement for overland flooding without the sewer backup coverage.
How the major insurers handle flood insurance in Canada:
Aviva’s comprehensive overland water protection is available with homeowners insurance and tenants insurance across Canada, as well as for seasonal and investment properties. You can set the deductible (the amount you’ll pay if you need to use your flood insurance ) at either $1,000, $2,500, $5,000, $10,000, $25,000, or $50,000. Of course, the higher the deductible, the lower the monthly premium.
Bonus: Aviva Canada will provide $1,000 towards installing sump pump, a backwater valve, or another device that can help prevent future sewer backup losses.
What’s excluded: Saltwater floods, properties with a reverse slope driveway, intentional breaches of dikes, dams, levees and other manmade structures, and customers living in certain high-risk regions.
RSA’s comprehensive waterproof coverage includes damage from storms, flooding, eaves, downspouts, drains and sewer backup. It’s available in Alberta, B.C., Manitoba, Newfoundland, New Brunswick, Nova Scotia, Ontario, and Prince Edward Island.
Bonus: RSA has clarified its policy wordings so its water damage extension only covers sewer backup, septic, and sump issues.
What’s excluded: Saltwater and coastal floods, damage related to tsunamis and dam breaks; all homes in Quebec, Saskatchewan and the territories; and some homes in areas that are at extreme risk of flooding, though sewer backup insurance may be available.
This comprehensive water endorsement is available for homeowners in Ontario and Alberta. If you have to make a claim, your deductible will be a percentage of the claim amount, from 2% to 35%, with a minimum of $1,000. Coverage is available throughout Ontario, even in regions that are at a high risk of flooding.
Bonus: If your house is completely destroyed by a flood, you can choose if you want to rebuild at the same location, rebuild at a different location, or simply take a cheque for the home’s insured value and not rebuild at all. The Co-operators also offers discounts for sump pumps and other loss-mitigation devices.
What’s excluded: Houses outside of Alberta and Ontario; structures designed or used for agricultural purposes.
Square One Insurance
This Vancouver-based direct insurer automatically includes sewer backup and flood coverage in 95% of its home insurance policies. It currently works with clients in B.C., Alberta, Saskatchewan, Manitoba, and Ontario.
Bonus: Coverage starts at an extra $2 a month for renters and condo owners and $4 a month for homeowners.
What’s excluded: Seawater floods, ground water, rising of the water table; gradual seepage, condensation or leakage over a period of time; damage occurring when the property is vacant; homes in areas at a high risk for flooding; all homes in Quebec, Atlantic Canada, and the territories.
Need home insurance?
A national program for flood insurance in Canada in progress
According to the Insurance Bureau of Canada, a national flood program is on the horizon, but the question remains, “how would it work?”
The federal government needs all provinces and territories to agree on an overall plan for the country. They don’t need to look far to get a working model.
In the US, the Federal Emergency Management Agency (FEMA), launched the National Flood Insurance Program (NFIP) to help mitigate the effects of flooding and reduce the socio-economic impact of natural disasters.
In other words, some high-risk American citizens pay into a federal program to help recover from catastrophic weather events. The problem is, in 2017, NFIP was in debt to the national treasury for $30 billion due to flood damage. The treasury forgave $16 billion, but then came Hurricane Harvey, Irma, and Maria causing the debt to increase.
Canadians are looking at Flood Re, the British national flood prevention program. The British government is attempting to get any properties, low or high risk, to subsidize a small minority of high-risk homes. It certainly seems to be working better, but so far, the federal government hasn’t said which system they’d like to use, just that they are pursuing one.
The bottom line
If you’re concerned how a flood may damage your home, you know the financial implications can be dire. Buying a special flood endorsement on your current home insurance policy is a good idea. If your insurer charges too much, consider shopping online for home insurance quotes to see if you can find a better deal elsewhere.