History of residential flood damage in Canada

To understand the current Canadian approach to damage caused by water, we need to understand the difference between flood, sewer backup and water damage. Let’s take a look at the different types of water-related losses.

Overland flood

A flood occurs when a large quantity of water flows over what is normally dry land, and seeps into your home through windows, doors and cracks. The common causes of flood are:

  • Natural dam failure;
  • Spring snow-melt runoff;
  • Storm rainfall;
  • Structural failure; and,
  • Tidal flooding.

Most home insurance policies do not currently cover damage due to flood. As described on the Canadian options webpage, some providers have introduced inland flood insurance, as it relates to freshwater or wastewater.

Sewer backup

Sewer backups can occur when municipal sanitary and/or storm sewer systems cannot handle high volumes of water from snowmelt or rainstorms. As a result, wastewater or freshwater backs up into your home through toilets and/or drains.

If the water backing up into your home is from a sanitary sewer system, it is usually brown or grey. If, on the other hand, the water is from the storm sewer system, it is usually clear.

Most home insurance policies offer protection against damage due to sewer backup. In some cases, protection is automatically included. In others, it needs to be added.

Water damage

The sudden and accidental entry, or release of, water in to your home is considered water damage. The water must be caused by something other than a flood or sewer backup. For instance, your washing machine overflows, a pipe bursts, or a tree falls on your roof causing rain water to enter your home.

Most home insurance policies offer protection against water damage, but this does not include water that slowly leaks or seeps into your home. For instance, if you have cracks in the foundation of your home, and water seeps in every time it rains. In some cases, you may need to specifically add water damage protection to your policy.

History of Canadian inland flood damage

Did you know that until recently Canada was the only G8 country not to offer residential flood insurance? You might be inclined to think that Canadian home insurance policies exclude flood damage because these events don’t happen very often. As the table below shows, that’s not the case. In fact, there have been 36 major inland floods in Canada since 1900.

Year Location Damages
1909 Chester, New Brunswick $149 million
1916 Central Ontario $161 million
1920 Southwestern Ontario $132 million
1920 Prince George, British Columbia $131 million
1923 St. John, New Brunswick $463 million
1934 Plaster Rock, New Brunswick $198 million
1936 New Brunswick $188 million
1937 Southern Ontario $470 million
1948 Fraser River, British Columbia $5,172 million
1948 Southern Ontario $706 million
1950 Winnipeg, Manitoba $4,652 million
1954 Southern Ontario $5,392 million
1955 Saskatchewan and Manitoba $362 million
1961 St. John, New Brunswick $148 million
1972 Richelieu River, Quebec $124 million
1974 Maniwaki, Quebec $103 million
1983 Newfoundland and Labrador $115 million
1987 Montreal, Quebec $147 million
Year Location Damages
1993 Winnipeg, Manitoba $618 million
1995 Southern Alberta $285 million
1996 Saguenay, Quebec $2,699 million
1996 Montreal, Quebec $145 million
1997 Southern Manitoba $1,230 million
1999 Melita, Manitoba $163 million
2004 Edmonton, Alberta $303 million
2004 Peterborough, Ontario $129 million
2005 Southern Ontario $1,587 million
2005 High River, Alberta $1,519 million
2007 Saskatchewan $138 million
2008 St. John, Newfoundland and Labrador $12 million
2009 Red River, Manitoba $1,000 million
2010 Southern Alberta and Saskatchewan $956 million
2010 Newfoundland $82 million
2011 Assiniboine River, Manitoba $1,000 million
2012 Ontario and Quebec $350 million
2013 Calgary, Alberta $5,000 million

The frequency of inland floods in Canada appears to be increasing. Many believe this is largely due to climate change and urbanization. Urbanization occurs when bare land is developed: roads are asphalted, homes are constructed, driveways poured. The amount of permeable land is so reduced, that even a moderate rainfall can cause flooding.

In cases where insurance protection is not available, assistance to those affected by flooding is available from the Canadian government. If insurance companies can accurately calculate the risk of flood in various areas, they can then determine the proper rates to charge and deductibles to apply. Higher premiums could provide an incentive for homeowners to take action to prevent the risk of flood damage. Also, insurers are experienced at settling claims and getting people back into their homes quickly.

So, why do some Canadian home insurance policies not cover flood damage? Most insurers and industry associations typically cite the following reasons:

Improper zoning

Municipal, provincial and federal governments know that specific areas are susceptible to flooding. As such, it’s not prudent to zone these areas for residential development, without first investing in proper infrastructure. Doing so means that it’s not a question of if flood claims will arise, but when will they arise and how much will they cost.

Outdated infrastructure

Much of the public infrastructure used by Canadians is very outdated. The municipal, provincial and federal governments need to work together to fund improvements to sanitary and storm sewer systems, dykes, levees, pumping stations, flood boxes and other structures to better protect communities from flooding.

Incomplete flood maps

For most of Canada, maps identifying areas at risk of flooding are simply not available. Some provinces, like British Columbia, Alberta and Ontario, first developed provincial maps in the 1970s. Many of these maps haven’t been updated. For these maps to be useful, they must consider the current mix of infrastructure as well as the structures in the areas.

It’s because of these reasons that some insurance providers are concerned that they would face adverse selection if they offered flood insurance. That means only people living in areas with high flood damage risk would purchase the insurance. As a result, it would be impossible to charge enough premium to cover potential losses from flood damage.

Canadian government assistance for flood damage

So, what happens when there’s a flood that causes damages to homes? First, affected homeowners and renters will need to determine if their home insurance includes flood protection. If it doesn’t, the provincial/territorial and federal governments work together to offer affected homeowners and renters financial assistance.

The federal government provides financial assistance through the Disaster Financial Assistance Arrangements program. Under this program, the federal government provides assistance to provinces/territories if costs for response and recovery become so high that provinces and territories can’t be expected to cover them on their own.

The amount of financial assistance is determined on a “dollar-per-capita” formula. The first dollar per capita of damages is a provincial/territorial responsibility. Damages beyond that threshold level are eligible for federal assistance. This financial assistance is paid to the provinces and territories in need, not to individuals affected by the disaster. It is up to the provincial/territorial government to divide the funds amongst individuals. As a result, the applicable limits per loss may vary from one location to the next.

The federal government has paid out more than $3.4 billion dollars since its inception in 1970. Some examples are the Alberta floods in 2005, the 2003 British Columbia wildfires, and the 2006 flood in Newfoundland.

Details of the financial assistance programs by province/territory follow.

British Columbia

When a disaster occurs in British Columbia, the provincial government may declare those affected to be eligible for Disaster Financial Assistance (DFA). It’s important to note that the DFA program is only available if the loss could not be insured or other assistance programs are not available. The DFA program is intended to help replace or restore essential items and property destroyed or damaged, back to pre-disaster condition. Highlights of the program follow.

  • You need to show that the affected property is your principal residence. Owners of damaged rental properties must apply and qualify as a small business.
  • You are responsible for the first $1,000 of an eligible loss.
  • For losses beyond the first $1,000, 80% of the loss amount will be covered up to a maximum of $300,000.
  • Assistance is not available for seasonal or recreational properties, hot tubs, patios, pools, garden tools, landscaping, luxury items (like jewelry, fur coats and collectibles), and recreational items (like bicycles).
  • You will need to submit an application to Emergency Management BC within 90 days of the date that the DFA program was authorized.

For full details, see BC Disaster Financial Assistance.

Alberta

When a disaster occurs in Alberta, the municipal government applies to the province for assistance on behalf of its citizens. If the province approves the request, a Disaster Recovery Program (DRP) is set up to help people whose property was damaged. The province will only approve requests if the event is considered extraordinary, insurance is not available to cover all damages and losses, and the event is widespread.

The DRP will cover the costs of returning essential property to its pre-disaster condition. There is no cap for a total declaration amount, but rather the amount of assistance is determined on an individual applicant basis. There is a cap, however, for individual items.

Eligible assistance for homeowners and renters may include:

  • A re-establishment assistance grant of $3,000 for each adult, and $750 for each child under the age of sixteen years, up to a family maximum of $7,500.
  • Financial assistance of uninsured costs for the replacement of, or repairs to, destroyed or severely damaged homes to pre-disaster functional condition.
  • Financial assistance for the replacement of uninsured items essential for everyday living, including the cost of clean-up.

Examples of the caps on specific items are:

  • Bicycles: $150 each; one per person.
  • Clean up by homeowner for residence: 120% of provincial minimum wage; 200 hours per application.
  • Clothing: $3,000 per person.
  • Computer: $1,000; one per application.
  • Dining room set: $2,000; one per application.
  • Freezer: $1,000; one per application.
  • Household goods (e.g. bathroom scales, hampers, garbage cans, and fans): $500 per application.
  • Living room suite (excluding coffee and end tables): $2,000; one per application.
  • Radios: $50 each; two per application.
  • Telephones: $50 each; two per application.
  • Television: $300; one per application.

Items not eligible for assistance include:

  • Beverages and their containers.
  • Cameras.
  • Documents and books (with some exceptions).
  • Fur coats (unless considered a regular winter coat under the maximum allowed for clothing).
  • Jewellery and works of art.
  • Recreational property and recreation items (with some exceptions).

For full details, see Alberta Government Disaster Assistance Guidelines.

Saskatchewan

After a disaster, the municipal government must apply to the provincial government for assistance under the Provincial Disaster Assistance Program (PDAP). PDAP is not a substitute for private insurance nor does it provide full compensation for losses. PDAP provides assistance to return property to its pre-disaster value. It does not provide financial assistance for drought or fire-related losses. Highlights of the program follow.

  • You need to show that affected property is your principal residence. Seasonal cottages are not eligible.
  • Landlords may claim damages to the property as well as repair costs, if they meet the small business criteria.
  • Items must be uninsurable, and considered “essential” (e.g. beds, essential furnishings and clothing, furnaces, water heaters, computers and televisions).
  • You are responsible for 5% of the eligible expenses and the remaining 95% is payable by PDAP.
  • You, as a homeowner or renter, are eligible for compensation up to $240,000.
  • GST and PST are not covered.
  • Improvements and upgrades are not covered, unless required due to new codes or standards, and only if upgrade is directly related to eligible repair under PDAP.
  • Certain items are limited, such as one television per claim, and one fridge per claim.
  • You are responsible for protecting your property as much as possible. If you have not taken sufficient measures to protect damaged property from further damage or deterioration, PDAP may deny your claim, or reduce the amount of coverage available.
  • You must provide true, accurate, and complete information relating to your claim. If you knowingly provide false information or omit information, PDAP may deny the claim entirely, and/or recover any payments already made.

For full details, see Saskatchewan Provincial Disaster Assistance Program.

Manitoba

If a disaster strikes in Manitoba, Disaster Financial Assistance (DFA) can be made available for eligible costs. DFA is intended to provide financial assistance to restore property to a habitable and functional state. Highlights of the program follow.

  • Homeowners can apply for assistance for damage to their building and personal possessions, for their principal residence only. Tenants may apply for damages to personal possessions only.
  • Items must have been uninsurable.
  • Costs cannot be recovered from any other program. Any losses that are recoverable by law are not eligible.
  • Items must be considered “essential”. Luxury items, recreational property, landscaping, fencing (other than farm fencing) are not covered.
  • You will not be covered for lost income or opportunity, inconveniences, normal operating costs, or for upgrading existing facilities.
  • You can claim a maximum of $240,000 per claim.
  • DFA will pay 80% of the eligible costs and losses. Payments may be reduced if funds are received from other sources.

For full details, see Manitoba Disaster Financial Assistance.

Ontario

The Ontario Disaster Relief Assistance Program (ODRAP) is an assistance program designed to help municipalities, individuals, farmers, small business, and non-profit organizations after a natural disaster. The intention is to cover the costs of returning essential items to pre-disaster condition. ODRAP is not intended to be an alternative or a substitute for insurance.

The ODRAP states that in the event of a natural disaster, individuals are expected to bear the initial responsibility for their losses. If the losses are so great that individuals cannot cope on their own, the municipality and the community at large are expected to provide support. Ontario is the only province in Canada that requires victims of a disaster to raise their own money.

General assistance helps victims restore essential furnishings and property to pre-disaster condition. Payments may be up to 90% of adjusted claim amounts, however, the final amount paid is determined by how much money is fundraised. For each dollar fundraised by the community, the province will match up to two dollars. Payments may be reduced if not enough money is fundraised.

You may be eligible for assistance if:

  • You are within the declared disaster area and suffered losses directly related to the disaster.
  • Your losses are not covered by insurance.
  • You are a private property owner or tenant.
  • Your losses are considered eligible losses and costs under the ODRAP program.

Eligible losses include:

  • Costs of restoration, repair or replacement to pre-disaster condition of primary residence (e.g. roof, chimney, floors, walls, wall coverings, plumbing, heating and electrical).
  • Costs for cleanup of property for safety reasons or to provide access (e.g. mould and debris removal).
  • Costs for restoration, repair or replacement of basic furniture or movables damaged as a result of the disaster (e.g. major appliances, essential clothing and furniture).

Ineligible costs include:

  • Non-essential furnishings.
  • Home entertainment equipment.
  • Recreational items.
  • Sports equipment.
  • Landscaping and private roads.
  • Personal injuries.

For full details, see Ontario Disaster Relief Assistance Program.

Quebec

If there is an actual or imminent disaster In Quebec that puts your safety and your property at risk, you may be eligible for the Financial Assistance to Disaster Victims (FADV) program. In order to be eligible, belongings must be considered essential, and must be uninsurable. Claims may also be made under the FADV program for temporary shelter, and emergency response measures. Highlights of the program follow.

  • Up to $3,000 for materials and labor-related to urgent preventive measures to protect your property.
  • Up to $20 per day (after the first 3 days) for extra housing/food expenses for each resident, if you are asked by the authorities to evacuate your uninhabitable principal residence due to a disaster.
  • Up to $50 per person for clothing if you were unable to take clothing with you when evacuated, and up to $150 per person for winter clothing if during the cold season.
  • Up to $1,000 for moving/storage expenses if personal property had to be moved/stored as a result of a disaster.
  • For your principal residence and its access road, if affected by an eligible disaster, assistance may be available to cover the costs of: (1) the emergency work to ensure the safety of the residents and allow repair of the principal residence; (2) the damage caused to the principal residence and in the following essential rooms: living room, kitchen, bathroom, laundry room and bedrooms permanently occupied by family members; and, (3) the repairs to the access road essential to your principal residence, to allow minimal and safe access to that residence.
  • For damages to principal residence and access road, you would be eligible for the lesser of: (1) 80% of the eligible damage to principal residence; (2) the amount of the municipal assessment, up to a limit of $150,000; or, (3) 100% of the cost of emergency or temporary work over $500. In some cases, you may use these funds for a departure allowance or for immunization or moving of your residence. In that case, payment would equal 100% of the amount of the damage, but not exceeding the maximum amount stipulated by the program. You may be eligible for up to an additional $25,000 for demolition and disposal of the debris.
  • For essential belongings, you may obtain financial assistance for the repair or replacement. Total damage must be over $100.

For full details, see Quebec Financial Assistance to Disaster Victims.

Nova Scotia

In Nova Scotia, the Disaster Financial Assistance (DFA) program is available to help local residents, farmers, small businesses and non-profit organizations recover from damage due to an emergency. Nova Scotia provides assistance under an agreement with the federal government, subject to its guidelines. Highlights of the program follow.

  • Damage to your home must be uninsurable.
  • Maximum payable per application is $80,000 for individuals.
  • Applications are subject to a $1,000 deductible.
  • Financial assistance is the lessor of the amount of the total eligible damage (over the $1,000 deductible) and the maximum amount payable under the program.
  • Assistance is provided only to restore property to its immediate pre-disaster condition.
  • Improvements done to reduce exposure in future, may be covered to a maximum of 15% of the eligible damage. Considered on a case-by-case basis.
  • Eligible household goods may be replaced with basic models of such items.
  • Items may be repaired or replaced, whichever is the least costly option.
  • Structures will be repaired to pre-disaster condition, including costs to meet the prevailing building code.
  • If the structure is beyond repair, assistance will be limited to the value of the property as indicated by the property assessment at the time of the loss.
  • Casual labor provided by the owner and immediate family members to clean-up the damaged property will be eligible at the provincial minimum wage hourly rate up to a maximum of 100 total hours, if substantiated by a damage appraisal report.
  • No coverage is provided for lost earnings if you are unable to work as a result of the emergency.
  • Privately owned roads are not covered by DFA.

For full details, see Nova Scotia Disaster Financial Assistance.

New Brunswick

In New Brunswick, the government may establish a Disaster Financial Assistance program to respond to the most urgent needs of affected residents in a disaster. Highlights of the program follow.

  • Must be an event which is not insurable at a reasonable cost.
  • No third party can be held accountable
  • There is significant widespread damage.
  • $80,000 per household for structural damages to property, which is over and above the cost of losses to eligible contents.
  • If structure is beyond economical repair, owner could be eligible for buy-out.
  • $1,000 deductible for individual homeowners.
  • Basic repairs of structural damage to a family homes.
  • Appliances (e.g. refrigerator, stove, washer and dryer) that could not be removed from flood danger.
  • Costs of clean-up, such as rental of fans, carpet cleaning machines, etc.
  • Lost food.
  • Driveway and retaining wall repairs.
  • An advance of $4,000 may be available if structural damage is significant.

Not eligible for DFA:

  • Losses covered by insurance, recoverable through legal action, or covered by other government programs.
  • Seasonal residences or recreational equipment such as boats, all-terrain vehicles, travel trailers.
  • Outbuildings such as sheds, barns or garages.
  • Decks.
  • Paving.
  • Erosion or landscaping.
  • Luxury items such as jewelry.
  • Non-essential items.

For full details, see New Brunswick Disaster Financial Assistance.

Prince Edward Island

If a natural disaster occurs in Prince Edward Island, the province may apply for assistance through the federal Disaster Financial Assistance Arrangements program. A disaster recovery program may be implemented, which could include providing financial assistance to residents and small business owners. This program is available when the natural disaster has broad economic and community impacts.

For full details, see Prince Edward Island Financial Assistance Programs.

Newfoundland and Labrador

In Newfoundland and Labrador, if a natural disaster occurs, assistance may be provided through the Newfoundland and Labrador Disaster Financial Assistance Program (NL-DFAP). The program is designed to provide basic financial assistance to individuals, small businesses, non-profit organizations, municipalities, and farm operations. Damage must be widespread and caused by an abnormal event, like flooding or landslide, that is not as a result of negligence or deterioration. Highlights of the program follow.

  • Will restore or repair property to pre-disaster condition.
  • Only essential items will be covered.
  • Assistance cannot be used to top up assistance received under any other programs.
  • Damage to a principal residence may be eligible, and maximum amounts may be established by the provincial government.
  • Damage to essential contents, in a principal residence only, will be covered.
  • Non-principal residences are not covered, unless they qualify as a small business.
  • Indication of property neglect may reduce the overall amount of the eligible claim.
  • Reasonable effort must be made by the claimant to reduce the effects of the disaster.
  • Damage to structures built before the area was designated as a flood zone will be eligible for disaster assistance funding. Damage to property built, or additions or extensions added to property, in an area after it was designated as a flood zone will not be eligible.

Examples of damage or loss not covered by NL-DFAP:

  • Lost income.
  • Any damage which is reasonably insurable.
  • Vehicles and recreational machines such as skidoos, snow mobiles, all-terrain vehicles.
  • Non-resident property such as seasonal, secondary, and recreational properties.
  • Repairing roads whose sole purpose is to provide access to or within private recreational areas.
  • Non-essential and luxury items.
  • Damage/loss which occurs in a designated flood zone.
  • Sewer backup is not eligible as it is an insurable peril.

For full details, see Newfoundland and Labrador Disaster Financial Assistance Program.

Yukon

If a natural disaster occurs in the Yukon, the territory may apply for assistance through the federal Disaster Financial Assistance Arrangements program. A disaster recovery program may be implemented, which could include providing financial assistance to residents and small business owners. This program is available when the natural disaster has broad economic and community impacts.

For full details, see Yukon Recovery.

Northwest Territories

When a disaster occurs in the Northwest Territories, financial assistance may be available to affected individuals and small businesses through the Disaster Assistance Policy (DAP). This assistance is intended to help those affected recover from the disaster, and to restore damaged property to pre-disaster condition. Highlights of the program follow.

  • The event must be an emergency.
  • Damage is widespread, affecting a significant number of people or properties.
  • Health, safety, and welfare of the affected residents are at risk.
  • Emergency operations are conducted.
  • Serious efforts must be made by residents to protect property and minimize risk.
  • Coverage will be for no more than 80% of your loss, subject to a maximum of $100,000.

Eligible costs may include:

  • Principal residence (and ancillary structures) and essential possessions contained inside.
  • Items essential to hunting and trapping, providing the claimant relies on hunting and trapping for a significant part of his or her income.

Examples of ineligible costs:

  • Items which could have been insured (insurance must have been readily available and at a reasonable cost).
  • Costs recoverable through legal action.
  • Losses eligible for financial assistance under any other program.
  • Non-essential items, such as summer cottages, furs, jewellery, art, landscaping and fencing.
  • Costs which could have been prevented by means available to persons affected prior to the disaster.

For full details, see Northwest Territories Disaster Financial Assistance.

Nunavut

If a natural disaster occurs in Nunavut, the territory may apply for assistance through the federal Disaster Financial Assistance Arrangements program. A disaster recovery program may be implemented, which could include providing financial assistance to residents and small business owners. This program is available when the natural disaster has broad economic and community impacts.

For full details, see Nunavut Emergency Management.

This approach to residential flood insurance has been criticized by many residents who had to rely on the government’s disaster financial assistance programs. These programs do not fully indemnify residents and will only provide assistance for the essentials. Moreover, residents are responsible for managing the claims/restoration processes on their own. The government only provides financial assistance to those who qualify.

Demand for a better approach to flood insurance increased as a result of the 2013 floods in Alberta and Ontario. Canadians want broader flood insurance protection as is offered in virtually all other developed countries in the world.

Learn about international approaches

Types of home insurance in Canada

As mentioned earlier, home insurance is available whether you own or rent your home, and whether it’s used as your primary residence, a rental property, or a vacation property. Traditional insurance providers most commonly offer the following three type of home insurance policies:

Named perils

These policies specify the loss types (or perils) that you’re protected against, usually including:

  • Fire or lightning;
  • Explosion or smoke;
  • Falling objects;
  • Impact by aircraft or land vehicle;
  • Riot, vandalism or malicious acts;
  • Some types of water damage;
  • Windstorm or hail; and,
  • Theft or attempted theft.

Comprehensive

These all-risk policies protect you against all types of loss except those specifically excluded.

Loss or damage due to wear and tear, snowslide or landslide, acts of terrorism, and war are some examples of the types of loss typically excluded in comprehensive policies.

Even with the exclusions, comprehensive policies provide you with the best protection and you shouldn’t settle for less.

Broad form

The best way to describe broad form policies is that they provide comprehensive protection on your home and named perils protection on your personal property.

While this may seem like an interesting idea, it’s actually quite silly. Let’s say you’re painting your family room and accidentally drop your TV while moving it. With a broad form policy, any damage to your hardwood floors would be covered, but damage to your TV would not.

Be sure to check that you actually have a comprehensive policy. If you don’t, you’re not fully protected and will be disappointed if you have a claim. Even if you have a comprehensive policy, you often need to specifically add, and pay extra for, critical protection you need. For example, most traditional policies don’t automatically provide earthquake or sewer backup protection. And, it’s important to note that regardless of the type of home insurance policy you have, it likely does not cover damage due to overland flood.

Low-cost home insurance that includes flood protection

Square One home insurance starts at $15/month. With this policy, you get comprehensive coverage that includes protection against break-ins, earthquakes, hailstorms, and fires. The policy automatically includes critical sewer backup and water damage protection. In most cases, it also protects against damage from inland flood. No paying extra.

To see how affordable Square One home insurance can be, get your free online quote now. Or, call 1.855.331.6933 for a phone quote. Square One is open 9:30 am to 9:30 pm (ET), Monday to Saturday. It only takes 15 minutes to get a quote.

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