• Jeff Sproul

Are You Fully Covered?

Updated: May 9


A hot button issue when it comes to property insurance is water damage coverage and more specifically flood coverage. After seeing what happened this past year in the Calgary area as well as the record downpour in the GTA on July 7th a number of people were surprised to find that floods are not covered in their homeowners’ policy, but sewer backup is an added endorsement. To answer the question of whether a “flooded” basement is covered on your home insurance ultimately comes down to how the water entered your home. Garrett Kikot of Benson Kearley IFG Private Client Insurance explains “rise of the water table or overland water damage is not covered, nor can it be added to any home owners policy in Canada, but water damage due to a sewer back up, septic tank back up, or sump pump failure, can and will be covered if you have a sewer back up endorsement. Therefore the entry point of the water causing damage determines if a claim can be made.”

Due to the rise in water damage occurrences a number of companies have limited or capped sewer back up endorsement coverages and raised premiums for this endorsement. “It is important to make sure that you are insured to the appropriate level” says Kikot. “A lot of houses have finished basements with high end finishings or entertainment rooms. They should be insured for the clean up, debris removal and complete repair should a water damage loss occur.”The cost involved in such a process is generally in the tens of thousands of dollars, if not more, depending on the extent of the damage and the basement’s features.

A preventative measure that many municipalities are offering rebates for, and some insurance companies are offering discounts for, is a back-flow valve. This valve is extremely effective and helps to stop sewers from backing up into the basement.

At this time in Canada, there is no coverage for a rise of the water table or over land water damage, however with the extent of damage in the Greater Calgary and Toronto areas over the past year, government mandated changes might not be far off. Until these changes do occur it is important for everyone to make sure that not only do they have a sewer back up endorsement but that they are covered for the appropriate amount.

Conversely, the commercial insurance marketplace has more flexible coverage options in dealing with water-damage losses arising out of sewer back up and flood. The recent trend in flood activity has not impacted overall underwriting as of yet but will likely have an effect, especially if this trend continues, both with increased frequency and severity of losses.

When reviewing your insurance needs and coverage, Kikot points out a few key points all consumers should keep in mind. • The general commercial property wording excludes flood and sewer back up. These perils must be added on by endorsement to obtain coverage. This explains the inconsistencies in commercial risks, where some are covered and others are not. • Minimum Deductibles: Sewer back up: $2,500 ; Flood $ 10,000 • The application of the deductible can be significant. A flood can cause sewer back up . Is the water damage caused by the backing up of a sewer, or the ingress of water from the overflowing of a natural body of water or accumulated surface water? The policy, and deductible, are sensitive to the peril that caused the loss. We often refer to a flooded basement, but a flood has a very specific meaning within the policy. • If exposed to a water damage loss, even for the first time, measures should be taken in the storage and preservation of property before and after a loss. Water losses have surpassed fire as the major peril and warrant the additional attention to loss control.

A review of insurance needs and coverage is included in all Northland Wealth Plans due to the reality that a family’s wealth is not limited to its investment portfolio. Ensuring all aspects of your wealth have been addressed and protected is the cornerstone to any Wealth Plan. To start the Wealth Planning process for your family, please contact our office and we would be happy to assist you.


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