What you need to know about flood insurance
Just like fire, water can be one of the most serious dangers to a home. While some water damage is covered under the typical home insurance policy, an actual flood isn’t covered by a basic home insurance policy in Canada.
If you’re in the process of figuring out how much protection your home needs, you likely wonder if you need flood insurance. While floods may not be a frequent peril for everyone, the damage flooding can cause is so extensive that just incident can destroy a home. Let’s take a closer look at flood insurance in Canada, and determine who should purchase coverage.
What exactly is a flood?
The first thing everyone needs to know is that for insurance companies “flood” doesn’t just mean “a bunch of water that entered my home and destroyed a bunch of my stuff”. In an insurance company’s view, the source of the water changes the nature of the coverage. So what is a flood? A flood (or overland flood) refers to water that overflows from bodies of water and destroys your property. A rising water table is also usually considered a flood for insurance purposes.
Other types of water damage are considered separately. For example, if the sewer backed up and the water caused damage to your home, it wouldn’t be covered under flood insurance. Sewer backup is often covered under regular homeowner’s insurance, so the costs associated with the damage should be covered by your insurer.
Burst pipes are also considered different to floods. They are usually covered in a standard home insurance policy, unless the pipes burst due to freezing or some because of some type of neglect.
Why don’t companies want to cover flooding?
Floods are just way too expensive for insurers to feel good about. Other forms of water damage are likely to only affect a single household at a time. Floods, on the other hand, cause catastrophic damage to entire areas, putting insurance companies on the hook for tens of millions (and sometimes billions) of dollars. This is why they only want to cover those who are likely to need flood insurance coverage – and are willing to pay an extra premium for it.
Do you need flood insurance?
Regional geography can tell you exactly how at-risk your home is for flooding. Conducting an Internet search for a flood plain map of your local area should work. It’s also useful to read up more on floods in general and how you can mitigate flood damage. If you live in an area prone to high water, you should talk to your insurance company about adding flood coverage to your policy to better protect your property.