Should you buy flood insurance in Canada?

Other than flooding from burst pipes or appliances gone haywire, water damage isn’t included in standard home insurance policies. And we only have to look back to the southern Alberta flood in June 2013, the torrential downpour that hit Toronto the following month, and even a run-of-the-mill blocked sewer line to know water damage adds up quickly.

Homeowners have long been able to buy an endorsement (an amendment) on their home insurance policy to cover sewer backup damage. And recently, some insurance companies added overland water endorsements to include damage from exterior freshwater floods, like rising river levels, storms, and overflowing downspouts. Coverage for saltwater flooding and tsunami damage isn’t available.

At Aviva Canada and RSA, customers can choose between a simple endorsement for sewer backup, sump and septic tank damage, and a comprehensive endorsement that includes sewer backup and freshwater floods. The Co-operators only offers a comprehensive endorsement. At Square One Insurance, the comprehensive endorsement is automatically a part of all eligible policies. You can’t, however, only buy an endorsement for overland flooding without the sewer backup coverage.

How the major insurers handle flood insurance in Canada:

Aviva Canada

Aviva’s comprehensive overland water protection is available with homeowners insurance and tenants insurance across Canada, as well as for seasonal and investment properties. You can set the deductible (the amount you’ll pay if you need to use your flood insurance ) at either $1,000, $2,500, $5,000, $10,000, $25,000, or $50,000. Of course, the higher the deductible, the lower the monthly premium.

Bonus: Aviva Canada will provide $1,000 towards installing sump pump, a backwater valve, or another device that can help prevent future sewer backup losses.

What’s excluded: Saltwater floods, properties with a reverse slope driveway, intentional breaches of dikes, dams, levees and other manmade structures, and customers living in certain high-risk regions.

RSA

RSA’s comprehensive waterproof coverage includes damage from storms, flooding, eaves, downspouts, drains and sewer backup. It’s available in Alberta, B.C., Manitoba, Newfoundland, New Brunswick, Nova Scotia, Ontario, and Prince Edward Island.

Bonus: RSA has clarified its policy wordings so its water damage extension only covers sewer backup, septic, and sump issues. 

What’s excluded: Saltwater and coastal floods, damage related to tsunamis and dam breaks; all homes in Quebec, Saskatchewan and the territories; and some homes in areas that are at extreme risk of flooding, though sewer backup insurance may be available.

The Co-operators

This comprehensive water endorsement is available for homeowners in Ontario and Alberta. If you have to make a claim, your deductible will be a percentage of the claim amount, from 2% to 35%, with a minimum of $1,000. Coverage is available throughout Ontario, even in regions that are at a high risk of flooding.

Bonus: If your house is completely destroyed by a flood, you can choose if you want to rebuild at the same location, rebuild at a different location, or simply take a cheque for the home’s insured value and not rebuild at all. The Co-operators also offers discounts for sump pumps and other loss-mitigation devices.

What’s excluded: Houses outside of Alberta and Ontario; structures designed or used for agricultural purposes.

Square One Insurance

This Vancouver-based direct insurer automatically includes sewer backup and flood coverage in 95% of its home insurance policies.  It currently works with clients in B.C., Alberta, Saskatchewan, Manitoba, and Ontario.

Bonus: Coverage starts at an extra $2 a month for renters and condo owners and $4 a month for homeowners.

What’s excluded: Seawater floods, ground water, rising of the water table; gradual seepage, condensation or leakage over a period of time; damage occurring when the property is vacant; homes in areas at a high risk for flooding; all homes in Quebec, Atlantic Canada, and the territories.