Flood Insurance in Canada
Everything you need to know about flood insurance in Canada.
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About flood insurance in Canada
According to the Insurance Bureau of Canada, the Toronto flash floods of 2013 constituted the most expensive natural disaster of all time in Ontario, costing the province almost $1 billion in insured losses. More recently, the city's 2018 rainstorms caused extensive flooding resulting in over $80 million in insured damage. With climate change on the rise, natural disasters like this are becoming more commonplace.
Despite the fact that flooding is by far the most frequent kind of natural disaster in the country, insurers only started offering flood insurance coverage in 2015. Before then, only sewer system back-up coverage was offered, but now Canadians have several options, depending on where you live. All flood insurance is optional, and if your insurer offers coverage it is purchased as an add-on to your home insurance policy.
This guide aims to answer all your flood insurance questions.
What is the difference between water damage, flood damage, and overland flood damage?
The difference is where the water comes from.
- Water damage Comes from inside the home. If a pipe in your home bursts, for example, this is considered water damage and is covered by most home insurance policies.
- Sewer system back up water damage Results from the back-up of freshwater or sewage from a septic system or sump pump.
- Tidal flooding This is when your home gets flooded by a body of saltwater, such as a tidal wave or a tsunami. Most Canadian companies do not provide coverage against tidal flooding.
- Overland flooding - Damage resulting from bodies of water such as lakes, rivers or oceans overflowing onto dry land, due to a natural disaster, or even a simple spring thaw, that seeps in and floods your home.
What are the different kinds of water damage covered by my standard home insurance policy?
These damages are covered by your base home insurance policy covers:
- Appliance or fixture malfunctions – Like a washing machine, dishwasher, or a toilet overflow on your property. The repairs to the appliances and the damage would be covered if it was sudden or accidental.
- Burst pipes – Flooding due to a faulty sprinkler/indoor plumbing, air conditioning/heating system ruptures, or a broken water main are all typically covered, as long as the damage is not a result of poor maintenance (e.g.: frozen pipes).
- Roof leaks – Leaks on the roof due to causes other than wear and tear will be covered. It is always wise to consult with your insurance provider to better understand the specifics.
- Ice damming – is a ridge of ice that forms at the edge of a roof and prevents melting snow and ice from draining off. This is covered under most basic home insurance policies.
- Sewer back-up damage – Water damage resulting from the back-up of freshwater or sewage from a septic system is not covered under a standard home insurance policy and must be purchased as an add-on. You may want to install sewer backwater valves and sump pumps, as this could fetch you discounts with some insurance providers. Damage caused by sump pump failure will not be covered under standard home insurance, so you would need to purchase sewer back up coverage to be insured.
What is covered and not covered in flood insurance?
Your guide to coverages and exclusions under flood insurance:
I rent my home. Do I need flood insurance?
If you rent an apartment in a flood plain, or a basement apartment, you may need flood insurance. Your landlord will typically have property/landlord insurance, which will insure the building and its structure, but the safety of your contents (like your furniture, electronics, clothes and other belongings inside your rental home) is on you and this is what tenant insurance is for.
A basic renters’ insurance does not automatically provide coverage against flood damage. However, you can buy this coverage as an add-on into your existing tenant insurance policy. Water damage like sudden leaks and pipe bursts will typically be covered in your standard tenant insurance.
If you feel like your home is prone to rainstorms or flood, don’t wait till the water comes up to consider flood insurance. Talk to your representative today to see if you should add this extra coverage to your insurance policy.
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