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If you have owned a home for any length of time you know that water is your enemy. In fact, water damage has become the number one source of all home insurance claims made each year (now accounting for approximately 50%).
This issue was again made evident in February of this year when Ontario experienced heavy rains and flooding which caused widespread property damage throughout the province. It was not surprising, therefore, that many people had questions during this time about “flood insurance” and what is and is not covered by a typical home insurance policy.
To help answer that question it is important to understand the distinction between the different types of water damage coverage that are available with home insurance policies:
Water Escape Coverage: Provides coverage when an internal plumbing line or fixture, or appliance suddenly ruptures and water leaks into your home causing damage. It also covers the accidental escape or overflow of water from a domestic water container (ex. a sink or bathtub) including heating, sprinkler, air conditioning or plumbing systems. This is a standard coverage in most home, tenants and condo insurance policies.
Water Infiltration Coverage: Provides coverage when water enters your home through an opening created suddenly and accidentally by another insured peril (ex. shingles blown off your roof in a storm allowing water to enter your home). This is also a standard coverage in most home, tenants and condo insurance policies.
Sewer Backup Coverage: Provides coverage if water backs-up and flows into your home from your municipal sewer system, private septic system or through sump pump failure. This is an optional coverage available for most home, tenants and condo insurance policies.
Ground Water Coverage: Provides coverage when water enters your home suddenly and accidentally through the foundation or basement wall or through the floor. This is an optional coverage only available from some insurance companies.
Water and Sewer Lines Coverage: If you experience a leak, break, tear rupture or collapse of a water and/or sewer line on your property that causes damage to your home this coverage will pay up to the specified limit to repair or replace water and/or sewer line. This is an optional coverage only available from some insurance companies.
Overland Water Coverage: Provides coverage for damage resulting from the overflow of a lake or river, or from heavy rain or rapid snow-melt that enters your home from a point at or above ground level. This is an optional coverage only available with some insurance companies.
IS FLOOD INSURANCE THE SAME AS OVERLAND WATER INSURANCE?
Not exactly. Flood Insurance has long been available in Canada but historically was only available as an option on commercial property insurance policies. It was originally intended to cover coastal flooding from salt water but today some insurers define it as “the breaking out or overflow of any body of water whether natural or man-made and includes waves, tidal waves and tsunamis.”
Overland Water Insurance, as noted above, is different in that it was designed to cover damage resulting from the overflow of a lake or river and also from heavy rain or rapid snow-melt that enters your home from a point at or above ground level. This coverage is a relatively new concept in Canada when it comes to personal lines insurance.
DO YOU NEED OVERLAND WATER COVERAGE?
The reality is you don’t need to live close to a creek, river or lake to be at risk of experiencing an overland water claim. While homes located downstream or in low-lying areas are particularly exposed, the fact is that all homes could experience an overland water exposure from heavy rains or a rapid snow-melt.
MAKE SURE YOU ARE COVERED
Remember, not all insurance policies are the same and there are different coverage options available. In addition, close attention should be paid to the limit of insurance provided for each type of water damage coverage in your policy because they are often different.
Another important factor to consider are the exclusions in your policy which are often overlooked and can vary between companies. A few typical exclusions applicable to water damage claims include damage caused by gradual wear and tear; slow leaks or seepage; mold; and water damage caused by freezing while you are away from your home for a set period of time as defined by your insurance company.
Unfortunately, many people don’t realize until after they experience water damage that their current policy may not include coverage or their coverage limits may be less than what they thought.
As your broker, part of our job is to help you understand your coverages and to provide you with options so that you can make an informed decision on the type of water damage coverage that you feel comfortable with.
If you are unsure about your current coverage or would like a second opinion on your property insurance policy, please contact our office and we would be happy to help you.
WHAT IF YOU CAN’T FIND A COMPANY TO PROVIDE OVERLAND WATER INSURANCE?
Depending on your claims history or where your home is located, it is possible that you may not qualify for overland water insurance with any insurance company or the premiums charged for this coverage may be unaffordable. This is mostly the case though for homes built in areas where the risk of flooding is extremely high.
Homeowners who don’t have overland water insurance may still be able to make a claim with the federal Emergency Management Office of the Public Safety Minister. Canadian citizens can apply for Disaster Financial Assistance Arrangements which are funded by the federal government and distributed by the provincial governments.
If you have questions or comments please don’t hesitate to contact us 1-800-282-1915 or email us at info@cmrinsurance.com.
