Flood insurance: How to get water damage coverage

If you're unsure of how your home insurance protects you from water and the many ways it could damage your home, you're putting yourself at risk. Water is the number-one cause of property damage and, for those who can claim it, it’s now the most expensive claim type in Canada, surpassing fire. The average cost of repairing a flooded basement is well over $40,000, and according to the Department of Public Safety the average cost of residential flooding in Canada is upwards of $2.9 billion annually. Are you properly protected?

There are three types of home insurance policies offered in Canada – basic, broad, and comprehensive. Most Canadians choose a comprehensive home insurance policy because the pricing difference between all three policies is minimal – so why not get the best? Comprehensive insurance covers the home and its contents from a number of risks, except for: earthquakes, war, and – you guessed it – flood damage.

Also read: How making multiple water claims impacts your home insurance coverage

Generally, your comprehensive policy will cover your home against water damage from a burst pipe – this is included in all standard base and comprehensive policies and can not be removed. A burst pipe is the result of pressure build-up in your water supply line due to temperature fluctuations and aging. But, there are several other examples of water damage beyond a burst pipe. To ensure coverage for all potential instances, you must add specific water damage and flood insurance endorsements to your policy.

A flood can occur from multiple sources. Heavy rains can cause a city's main drains to back up and flow into your basement. Overflowing rivers and ponds could cause a swell of groundwater that flows into your home. Heavy snowmelt can leak through your foundation, causing severe damage. Here are flood insurance options you may want to consider in your given situation.

These are the flood insurance coverage add-ons you need to consider for your home insurance policy:

Since 1970, provinces and territories have worked with the federal government to provide some financial assistance to those without flood insurance. The federal government only steps in when the costs far exceed what the province or territory can cover on its own. Each province and territory has its limits, laws, and regulations on how the money is given out.

Generally, the programs only offer assistance for the essentials and only if you couldn't have insured it in the first place. Residents receive financial compensation but must manage the restoration process themselves before submitting a claim. However, this process is set to change in the near future, as the federal government is targeting the roll out of a new flood coverage program for all Canadian homeowners as of April 1, 2025.

Below, we give a high-level overview of each province and territory's current financial assistance plan for when disaster strikes:

A report from the Centre for Research on the Epidemiology of Disasters (CRED) states that the cost of natural disasters has increased fourteen-fold since the 1950s. Water damage coverage and flood insurance can help pay to cover some of the damage, but the displacement from our homes, the claims processes, and the tragedy will live on forever in our minds.

In an ideal world, you’d never submit an insurance claim. Prevention becomes key. With that in mind, we’ve created a flood prevention checklist, for both indoor and outdoor, below.

Inland floods can happen anywhere in Canada, and their frequency is increasing due to climate change and a general loss of green space. Green space absorbs and dissipates water much better than concrete. Major urban centres with lots of concrete and asphalt need advanced sewer systems to handle all the water. Without it, or if it's not working correctly, we can have significant flooding.

See the chart below for the year, location, and cost of the major flood damage in Canada. 

It didn't stop in 2013. Ottawa, Toronto, St. John, and large areas in Quebec had major flooding in 2017. Quebec alone set up a $350-million-dollar fund to help 5,000 homeowners. The Insurance Bureau of Canada (IBC) reports Quebec and Ottawa flood costs added up to $223 million in insured losses. Most recently, in July 2023, the province of Nova Scotia experienced severe flooding, which resulted in serious property damage and loss.

Insurance Bureau of Canada’s (IBC) Insurers used to pay $500 million annually across the country in severe weather losses. Now they’re seeing an annual average of about a billion dollars. In 2018, the insurance industry paid out almost $2 billion in severe weather losses across the country.