Canadians wrongly feel they have flood insurance with their homeowners policies

flood insurance storm damage

A recent study has found that 65 percent of people in that country believe they have protection they don’t.

A recent survey conducted by Square One has determined that among the 1,500 Canadian participants, 65 percent erroneously believed that they had flood insurance included within their homeowners policies.

This misconception about the coverage was more common in some provinces than it was in others.

For instance, homeowners insurance customers living in Manitoba were the most likely to think they were protected against overland flooding. Equally, those in Saskatchewan were the least likely to believe that they had flood insurance included in their standard home coverage. According to the president of Square One, Daniel Mirkovic, “We found that many Canadians across the country are unaware of the current state of flood protection in Canada.”

Standard home protection in Canada does not include flood insurance protection from rising water.

flood insurance storm damageMirkovic went on to explain that “Water damage is the leading cause of insurance claims in Canada but most home insurance policies specifically exclude flood damage. Canada is the only developed country in the world where flood insurance has not been generally available.

It wasn’t until quite recently that there were any options available to Canadians who were victims of flood damage, aside from depending on the Disaster Financial Assistance (DFA) programs that were offered by provincial, territorial and federal governments. For instance, the massive flooding experienced in Ontario and Alberta in 2013 led to $5.3 billion in damages. Of that, only $3 billion was covered by insurance policies. Those without coverage had to use DFA programs. It didn’t take them long to find out that, even with that assistance from the federal government, much of the damage had to be paid for out of pocket.

The insurance industry in the country used that opportunity to recognize that it was not providing the victims of flooding with adequate protection. Industry associations are now working to provide improved flood insurance opportunities and are working with the government to improve flood migration and mapping strategies. That said, it remains true that standard homeowners coverage does not protect against flooding and it appears that most Canadians are not aware of this fact. For that reason, education may also become a priority.

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