With severe weather becoming less and less of a rarity across Canada, home insurance is climbing up the list of things Canadians have to double-check. And yet a new survey has found that one in three Canadian homeowners mistakenly think their standard home insurance policy includes flood protection. It doesn’t.
The Insurance Bureau of Canada recently revealed that severe weather insurance claims shot up 400% from 15 years ago. Most recently, hurricane Fiona tore through Atlantic Canada and left $660 million worth of insured damage in its wake, making it the most expensive severe weather event in the region.
“We are seeing increasingly devastating storms and flooding across the Canadian landscape, and many Canadians are without the insurance they need to protect themselves,” said RATESDOTCA managing editor John Shmuel. “Having the right coverage can mean a world of difference to a household that has experienced loss due to overland flooding.”
RATESDOTCA and BNN Bloomberg have taken a closer look into how covered Canadians are – and how covered they think they are. The survey found that while more than half (54%) of Canadians have taken out a policy on their homes, 32% think their standard home insurance policy covers them against water damage coverage when it doesn’t.
Water damage coverage is optional and thus only available for an added fee as endorsements or add-ons to a policy. It protects homes from everything from overland flooding (when water floods a home after overflowing from a nearby body of water), sewer backup (when water enters via a toilet or drain after a backup), and seepage, to mould damage and risks from living in a floodplain.
One in two Canadian homeowners did not have any additional water damage coverage, while almost one in three thought the standard home insurance policy already included it. Of the 50% who opted out of water damage insurance, 38% thought their insurance policy already had them covered against overland water damage and sewage backup. Only one in four Canadians had sewer backup coverage in addition to their home insurance, and far less (13%) were protected against overland flooding or seepage coverage.
RATESDOTCA pointed out that similarly, many homeowners did not have any insurance cover for storm surges when they were hit by Fiona in September.
That number may change, however, as the same survey showed that homeowners who had previous experience filing water damage claims were more likely to have added optional flood protection to their policy, alongside homeowners 55 years old and above. RATESDOTCA speculated the trend could be due to more years of homeownership and thus, more experience with the consequences of water damage.
Only 12% of the small pool of respondents who admitted they had made a water damage claim before had their claim ‘mostly or fully covered,’ implying a gap in either coverage or knowledge – or both. The Canadian government has been working to close this gap with talks of a national public-private flood insurance program that could help about 1.54 million houses in Canada receive sufficient coverage underway.
