Homeowners who don’t have flood insurance despite living in an area where it is available may not be eligible for federal disaster assistance funding, regardless of the damage suffered to their homes, leaving many Canadians in the lurch.
The specific type of insurance, called “overland flood” insurance, covers damage caused by water entering a house through windows or doors – as opposed to rising up through a basement floor drain due to an overwhelmed sewage system – and happens to be available in most parts of the country.
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The availability of overland flood insurance is relatively new; many Canadians demanded action from insurance providers following the devastating Alberta floods in 2013.
At that time, Canada was the only country in the G8 that didn’t offer overland flooding insurance, said Blair Feltmate, head of the Intact Centre on Climate Adaptation in the University of Waterloo’s environment faculty.
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“Following those floods, claims adjusters went into the homes, looked at the damage and said, ‘Sorry, the water came through your windows, not the sewer, so you don’t qualify for any insurance payout,” Feltmate said.
Over the last 12 to 24 months, however, overland insurance has become “pervasively” available, he said.
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Geographically, that may be accurate, but according to the Insurance Bureau of Canada only 13 of the country’s more than 200 insurance companies offer the protection, and only 10 to 15 per cent of Canadians have opted for it.
With that in mind, Feltmate said that 15 of the biggest insurance companies in Canada cover 65 per cent of the market – and most of those offer overland flooding coverage, he added.
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All told, there is a good chance many of the thousands affected by flooding in Quebec, Ontario, British Columbia and New Brunswick may not have overland flood coverage despite its availability in their community.
According to Public Safety Canada guidelines, “costs of restoring or replacing items that were insured or insurable” are not eligible for relief from its Disaster Financial Assistance Arrangements program.
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“Insurable means that insurance coverage for a specific hazard … was available at a reasonable cost,” the policy reads.
Together, the province and Public Safety determine what constitutes a “reasonable” cost – and that provision could give the government some wiggle room to include those who had flood insurance available to them but didn’t purchase it for whatever reason, Feltmate said.
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The federal government doesn’t deal directly with affected individuals. Rather, provinces or territories apply for financial disaster assistance on behalf of its residents and then distributes any funding received from Ottawa.
Following the criteria spelled out in the guidelines, the province wouldn’t be able to include costs associated with damage to any home that could have been insured while collecting data to include in its application. Their guidelines do offer a process for the province to dispute a federal decision.
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When asked whether Ottawa might make any exceptions if provinces seek federal disaster funding for these floods, a spokesman for Public Safety Minister Ralph Goodale’s office told Global News he could only point to the criteria of the program.
The spokesman also said it is “much too early” to peg the cost of damage the floods have caused, but there is an expectation the federal Disaster Financial Assistance Arrangements will be enacted.
Quebec, Ontario, New Brunswick and British Columbia all have provincial programs to offer financial help to victims of natural disasters. With some differences, all cover what they call “essential” items, and accept applications from individuals.