There are many unexpected issues and risks that your newly purchased house will face, but one of the most significant ones in Canada, given our current weather trends, is flooding. Over the past few years, in particular, Canadian homeowners faced significant damages as a result of flooding in Alberta, Ontario and Quebec.
When buying insurance for a house, most people assume that all types of flooding are equal and covered under a standard home insurance policy. Unfortunately, that is very far from the truth. For example, the origin of the water source (sewer, overland, etc.) impacts your coverage.
In this post, we’ll explore three most common types of flooding, with help of InsurEye, the largest Canadian platform for independent insurance, credit card and mortgage reviews. We will also provide answers to the most common questions about how you can protect your home with flood insurance.
The three main types of flooding in the home are due to:
- Plumbing issues/burst pipes
- Sewer backup
- Overland flooding
Does any home insurance policy cover all three flooding types?
In a word, no. When buying a simple, standard home insurance policy, you are actually quite vulnerable to the risk of flooding, and the last thing you want to find out when making a claim is that you don’t have the right flooding coverage. The costs of cleaning, restoration and refurbishing a finished basement, for example, can add up to over $100,000. If art, a wine collection or expensive electronics were damaged, that dollar figure goes even higher.
Here is an overview of what is covered by your typical policy for the three main types of flooding (there can be some variations though among insurers – here you see a typical case).
Which policy do I need for the best protection?
You want to make sure that your insurance company covers all three types of flooding, through its base policy and through additional endorsements. Your first question to an insurance company should be, “Are you able to cover general plumbing issues, sewer backup and overland flooding?” If the answer is yes, feel free to proceed and compare their prices.
Here are some combinations that we have seen on the market – please remember that they can change as more companies are starting to offer flood insurance.
Note: some providers may offer you an overland flooding endorsement only if you have a sewer backup endorsement, but some carriers will not have this condition.
How much coverage do I need?
It’s not enough to just have a homeowner’s insurance policy. You need to make sure you have enough coverage within your policy. Some insurance providers offer full coverage; others cap it at a particular amount, such as $100,000. Make sure you have enough coverage for each type of flooding. Should you have a finished basement with many expensive items, consider having at least $200,000 or even more in flood insurance coverage.
You also should remember about the deductibles, which is the amount you need to pay on a claim before the insurer starts paying for your claim. Ask what the deductible will be for every flood insurance type. Some insurers require higher deductibles for flood insurance, and these deductibles can be quite high – more than $10,000.
What else can I do to protect myself?
Here are a few other tips, because preventing a flood insurance claim is always better than making one.
- When buying a new house, check with municipal authorities to see if your future home is within a flood zone. Flood maps for your location may also be available online.
- Before signing a purchase contract, run an insurance quote for your future house and get a good idea of what your insurance premiums will be.
- Consider getting and integrating a sewer backup valve. This is a small device that will not allow water from the municipal sewage system to enter your home.
We hope you will find these tips helpful when buying your new house for you and your loved ones. Flooding is a big risk in Canada – stay informed and protected.
InsurEye hopes that these tips will keep you dry and properly insured. For years, InsurEye has kept Canadians informed about many aspects of insurance and has provided access to cheap home insurance, auto insurance and life insurance in Ontario, Alberta, British Columbia and other provinces.