Insurance and floods | Which amendment to be prepared?

Water is a pleasure, but it can also cause a lot of damage when it gets into places where you don’t want it. Is it possible to buy comprehensive protection? From burst pipes to torrential rain, swimming pool breakages and floods? Two experts help us see things more clearly.

Basic protections

Your washing machine is leaking, your aquarium has burst, leaving the fish inert in the living room, or the bathtub is overflowing to the floor below? The basic protection of your home insurance protects you against this damage caused by equipment inside the house.

“If it’s a broken public water pipe, it will be covered by the basic contract,” he said. The Press Line Crevier, Head of Technical Affairs and the Insurance Information Centre at the Insurance Bureau of Canada (IBC).

The amendments

Water infiltration through the ground and sewer backup

Distressing images of disasters caused by torrential rains from tropical storm Debby have toured the province. If we can’t stop water from coming in, can we at least mitigate its impact on our wallets? The answer is yes, by taking out additional protection from your insurer called an endorsement.

This optional coverage provides compensation for water damage caused by a sewer backup, ground infiltration, a failure of the French drain or septic tank, infiltration of rainwater or pool water, explains Jocelyn Laflamme, Vice-President of Actuarial and Underwriting at Desjardins Insurance.

“This endorsement has its own coverage limit,” continues Line Crevier of the BAC. “Let’s say my home is insured for $500,000; I could have a sewer backup and infiltration endorsement with its own limit which could be, depending on the needs assessment, $50,000.”

Floods

In addition to sewer backup and ground water infiltration, there is additional coverage for damage caused by lake and river overflows.

“If the water in a river overflows its banks, completely saturated the water table and the water seeps into the house, this amendment will cover the damage,” explains Line Crevier.

“However, if we only took out the sewer backup and infiltration amendment, and the watercourse reaches my land and there is infiltration, the damage will not be covered. When the water reaches my land, it takes out the flood amendment,” she explains.

This protection is always complementary to the program of the Ministry of Public Safety. If you do not have the flood rider, the Ministry will cover certain damages. When you have the protection, the insurer pays up to the limit of your rider and then the Ministry applies its program on the property that has not been compensated by the insurer.

This protection is not offered in some places, particularly in areas that regularly flood. “The price is getting so high that we stop offering it,” explains Jocelyn Laflamme of Desjardins Insurance.

“The federal government, the provinces and private insurers are working on a solution to address this issue of affordability of flood coverage in very, very high risk areas.”

Water above ground

Are you worried that heavy rains will cause water to seep through your roof, walls, doors or windows? You will be covered by taking out the specific rider for water that does not come from the ground.

According to the BAC, people generally take the same limit as the amount of insurance for the building. “If I insured my house for $500,000, the limit for this endorsement is also $500,000. But it can vary. We must check our situation with the offer from our insurer.”

Exterior demolition costs

What is this rider for? Particularly for the French drain. The insurer pays for damage caused inside the house by the leak, overflow or backup of the French drain or another installation with the rider for water infiltration through the ground and sewer backup.

However, it is another rider that covers the demolition costs and the excavation to reach the cause of the damage, the damaged French drain. This “exterior demolition costs” rider will also cover the land restoration.

“The insurer will not pay for the repair of the drain because it is maintenance,” says Mr.^me Crevier.

Swimming pool and spa

Do you notice that water has seeped into your basement because of the damaged pool? Has it collapsed under the weight of the snow? The sewer backup and infiltration endorsement will cover the damage to your home. However, if you want to be compensated for the damage to your pool, you must have optional coverage.

Tenants and co-owners

Should tenants and condominium owners also pay for addenda? Yes, if they want coverage for their home contents and living expenses if they have to leave their home while repairs are being made.

Two myths

“I have the right to complain only once”

“No, if the insurer has left the protection, it will pay as many times as it happens as long as it leaves the protection. What could happen is that if I have it too frequently, it will remove the protection and offer it to me once the infrastructure has been repaired and is safer and more secure. But if the insurer has left the endorsement, it will have to honor the contract, it will have to pay,” specifies the head of the BAC’s Insurance Information Center.

“No, it’s not just once. However, there is still a limit. These must remain uncertain events,” specifies Jocelyn Laflamme, of Desjardins Insurance.

In some cases, the insurer applies the concept of resilient reconstruction and pays for improvements to the building.

“Currently, we are going beyond the usual insurance principles, which are to put the citizen back in the same state as before the loss,” adds Mr. Laflamme. “We are therefore going beyond the amounts usually allocated. We are adding amounts to install check valves or submersible pumps that will allow our client to avoid future losses.”

“I can’t afford insurance”

Although this statement seems widespread, The rider for sewer backup and water infiltration through the ground is added in 78% of home insurance contracts. The one that protects against water that reaches above ground, for example through the roof, is added in 65% of contracts. As for the rider covering floods, which has only existed since 2017, it is added in 50% of contracts.

“It’s a little more mixed because in extreme areas, this amendment costs a little more,” he emphasizes. Jocelyn Laflamme, indicating that it is impossible to obtain an average price for the flood amendment, because the amounts vary from one extreme to the other.

How much does it cost?

Desjardins Insurance indicates that the average price of the sewer backup and ground infiltration rider costs $200 per year. The rider for Roof infiltration costs $75 per year.

The average annual premium for a homeowner’s policy, which may or may not include water damage riders, costs an owner-occupant $1,301, while a renter pays $347. The condominium premium is $544, but that does not include the condominium association premium. This is data from the 2022 IBC.

How much protection should you take?

Take the time to do the math. Even though it often seems like there is not much of value in the basement except our memories, the amounts to be paid to decontaminate, remove damaged materials, redo the floors, the bottom of the walls, the painting, part of the staircase, store belongings, buy new cabinets and a sofa can add up faster than the water that has seeped in.

According to data provided by the BAC, the average cost claims paid for the breakdown of a sanitary installation amount to $16,148; for ground water and sewers, at $15,134; for infiltration above ground, for example through the roof, at $8,413; and for overflow from a watercourse (flooding), at $20,908.

Advice

Homeowners with a backwater valve should avoid generating wastewater during heavy rains. Postpone plans to shower, run the dishwasher, or do laundry.

Do you have a drainage pump? It is very useful to also have a generator to run it in case of a power outage.