Water Insurance is Changing

July 8 storm

Many of us recall the flood of July 8th 2013. This storm pounded the West Greater Toronto Area (GTA), especially Etobicoke. The storm dumped 126 mm of rain on The City, 90mm in just two hours. This is more rain than fell during Hurricane Hazel! More rain than we normally see in an entire month, average rainfall for July is just 75mm. The July 8th storm was truly epic.

Extreme weather events are becoming more common. Some have said severe weather events that used to happen every 100 years, like the one that hit Etobicoke July 8th, could now happen roughly every 10 years. Coupled with aging infrastructure in our cities, insurers and homeowners can and should expect water damage claims to increase in frequency and severity.

Flood, or overland water, has not been specifically covered in the past. Often, there would be sewer backup damage as well as damage resulting from overland water entering the house. In these situations the insurers would often pay out claims, even though they could have been denied following the policy wordings to the letter. Insurers are now introducing overland water coverage to better address this grey area.

The below graphic outlines some of the coverage options for water insurance:

water insurance

Overland Water – Coverage that protects against water damage caused by lake / river overflow, heavy rain or rapid snowmelt that enters your home from a point at or above ground surface.

Ground Water – Optional coverage that protects against damage caused by water entering your home suddenly and accidentally through a basement wall, foundation or floor.

Sewer Back-Up – Coverage in the event water accidentally backs up from the sewer system and flows into your home through a sewer, septic system, sump or drain.

Water & Sewer Lines – Optional coverage to repair or replace water and sewer lines due to loss resulting from a leak, break, tear, rupture or collapse of the line on the owner’s property.

With these new coverages, the types of water damage losses are more clearly defined. Insurers will no longer be covering losses caused by overland water unless that coverage is purchased.

We highly recommend that your policy includes the new overland water coverage. When your renewal comes in, please review it with special attention to these coverages. Please call us to discuss if you have any questions or concerns.