Overland Flood Insurance Not Possible Without New Floodplain Maps

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Right now, no Canadian insurance company offers flood insurance, or more specifically coverage for anything caused by a flood that could be classified as a natural catastrophe, or overland flood insurance.

As First Foundation provides home insurance to Alberta residents, after the devastating floods that hit Calgary and surrounding areas in the summer of 2013, we have seen interest from people looking to be protected from future flooding.

Calgary Flooding 2013
Click here for more images of the Calgary Flood - canada.com

Most insurance companies offer water damage coverage, although you need to be careful as there are typically a lot of exclusions on the average homeowner’s policy for certain kinds of water damage. Some of these exclusions can be removed by purchasing extra coverage, but the ones that can’t are typically related to natural catastrophe floods. But the payouts from these can add up for the insurance company, driving up the costs of water damage riders significantly. According to this story from The Canadian Press, damage from flooding has been the biggest payout area for Canadian insurance companies for the past 15 years.

Good News: Insurers are Considering Overland Flood Coverage

Insurance companies, for the most part, want to offer overland flood insurance. The thing standing in their way is proper floodplain maps that account not just for historical flooding, but take into account the changing climate landscape for future predictions. A federal government program to produce up-to-date maps was axed in the 1990’s, but the Public Safety Department has ordered a new study due in March 2014 to assess the state of flood mapping, which is a start to creating the maps that insurance executives are looking for. While this means that:

Although Canadian overland flood insurance is a long way off, there is some hope that it may actually happen!

Bad News: Flood-Prone Neighbourhoods Could See Mortgages Dry Up

A new study has also been ordered that will survey civic leaders, province premiers, and bank executives to get an idea of how they will be able to help out with solutions for natural catastrophe flooding. One of the study’s leaders, Blair Feltmate, stated that mortgages are contingent on a homeowner getting insurance, and insurance companies may start pulling coverage for extremely flood-prone areas if current payout levels keep up. Banks, according to Feltmate, should be just as interested in solving the problem of a lack of proper Canadian overland flood coverage as insurers are, as it could threaten the mortgage business in the long term. We’re not just talking about rural areas; Feltmate cites the Downsview area south of the Toronto airport as being extremely flood-prone, with three major weather events causing flooded basements since May of 2013.

Can Canada Catch Up?

Canada is the only G8 country without some form of private sector overland flood insurance, and until new maps are done which take forward-looking climactic patterns into account, we won’t see it. Governments have a vested interest in making sure that these maps get on the fast track to production, since they are currently left holding the bag when a natural disaster occurs through provincial and federal disaster relief funds. Hopefully we’ll be able to write about overland flood insurance coverage being offered within a decade, with the creation of the necessary floodplain maps and help from the government and insurance industry.

It’s a good idea to get in touch with your broker about what your coverage for water damage is like!

If you have any questions about water damage and your home insurance, contact us and we’ll do our best to help you out.

Reference Articles: Flooding and Insurance

Gord McCallum has put together this list of articles that to provide further insight around flooding, how it impacts you and your insurance. if you know of some reference materials that should be added to the list, consider letting us know, we would love to include it!


Founded Working Web Copy in 1996, specialize in financial services writing. With First Foundation since 2010. In my spare time, you will find me in a kayak or watching episodes…

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