As climate change accelerates, Canada is witnessing a growing frequency of extreme weather events, including floods that have devastating impacts on communities and homes. Traditionally, standard home insurance policies in Canada cover a wide range of risks, such as fire, theft, and liability, but they typically do not include protection against overland flooding. This has made flood insurance an increasingly vital addition for homeowners across the country.
Floods are now the most common and costly natural disaster in Canada. With the increasing unpredictability of weather patterns, areas that were once considered low-risk are now facing significant flooding threats. In 2021 alone, floods caused billions of dollars in damages across the country, highlighting the urgent need for homeowners to reassess their coverage options.
Flood insurance generally provides coverage for damage to your home and its contents caused by overland flooding, which occurs when water from rivers, lakes, or heavy rainfall enters your home. This type of insurance typically covers:
Damage to the structure: Repairs to walls, floors, and foundations.
Personal property: Replacement of furniture, electronics, and other belongings.
Additional living expenses: Costs incurred if you need to live elsewhere temporarily while your home is being repaired.
It’s important to note that flood insurance does not usually cover damage caused by sewer backups, which requires a separate endorsement.
The cost of flood insurance can vary widely depending on factors such as your location, the elevation of your property, and the construction type of your home. Homes located in high-risk flood zones will naturally face higher premiums. However, even those in low- to moderate-risk areas should consider this coverage, as floods can happen anywhere, often with little warning.
Financial protection: Without flood insurance, you could be responsible for covering all repair and replacement costs out of pocket, which can be financially devastating.
Peace of mind: Knowing that you have coverage in the event of a flood can reduce the stress and uncertainty that often accompanies severe weather events.
Increasingly common events: As floods become more frequent, insurance companies are more likely to assess risk and adjust premiums. Having coverage now can protect you from potentially higher costs or limited availability in the future.
Many insurance companies in Canada now offer flood insurance as an optional add-on to standard home insurance policies. When considering flood insurance, it’s essential to:
Assess your risk: Use tools like the federal government’s flood maps to determine your flood risk.
Compare policies: Different insurers offer varying levels of coverage, so it’s crucial to compare options and ensure you’re getting the protection you need.
Review exclusions: Understand what is and isn’t covered by your policy to avoid surprises in the event of a claim.
With the increasing threat of flooding in Canada, flood insurance is becoming a crucial component of a comprehensive home insurance strategy. Whether you live in a high-risk flood zone or an area that has never experienced flooding, it’s essential to consider this coverage to protect your home and finances from the unpredictable impacts of climate change.
Your dwelling and most of its contents – such as your roof, laptop, and furniture – may
lose value over time due to factors such as age and wear and tear. This loss in value is
commonly known as depreciation.
Under most insurance policies, claim reimbursement begins with an initial payment for
the Actual Cash Value (ACV) of your damage, or the value of the damaged or
destroyed item(s) at the time of the loss.
If your home is uninhabitable and you have to temporarily relocate after a covered loss, your homeowners’ policy may reimburse you for any resulting increases in your normal day-to-day living expenses.
If your policy provides Loss of Use coverage, your policy will reimburse you for Additional Living Expenses (ALE) for the period of time reasonably required to make your home habitable again. This time period is commonly referred to as the “period of restoration.”
As climate change accelerates, Canada is witnessing a growing frequency of extreme weather events, including floods that have devastating impacts on communities and homes. Traditionally, standard home insurance policies in Canada cover a wide range of risks, such as fire, theft, and liability, but they typically do not include protection against overland flooding. This has made flood insurance an increasingly vital addition for homeowners across the country.
