09/12/2021 0 Comments
Flooded Basement? Let’s Talk About Your Options.
On November 15, 2021, British Columbians experienced one of the most catastrophic natural disasters recorded in our Province’s history. The flooding is being considered Canada’s most expensive natural disaster and has homeowners, farmers, and other businesses scrambling to initiate insurance claims and repair/restore their properties and belongings. However, many people are realizing that they are not covered by flood insurance and are left confused, anxious, and angry.
This article focuses on residential home insurance policies.
Historically in Canada, home insurance policies haven’t covered loss or damage caused by overland flooding, which occurs when bodies of freshwater, such as rivers or dams, overflow onto dry land. This is no longer the case in Canada. Many insurers now offer residential overland flood coverage for homes across the country. Commonly, this coverage is combined with sewer backup coverage. Both are optional, meaning the homeowner needs to pay an additional premium to be covered in the event of a flood. Even if you don’t live by a lake or river, your home could still experience flood damage in a variety of different ways. (For more information please visit: http://www.ibc.ca/qc/disaster/water)
While you could be entitled to some compensation from your insurer, there are variables to be considered. For example, it depends on the type of insurance policy that you may or may not have. It is important to understand how your coverage works, and where gaps in coverage may exist.
If you only purchased basic home insurance and you experienced damage to your home during the November 2021 BC flooding crisis, you may well be personally liable for repairs and remediation. You may be eligible for claiming damages against a third party (i.e., a municipality); however, the immediate costs associated with fixing your home would come from your pocket.
(also referred to as “Groundwater Flood Insurance” or “Overland Water Insurance”)
Optional coverage for purchase for homeowners policies, flood insurance offers protection for events when groundwater enters your home suddenly and accidentally through basement walls, foundations or floors. Although obviously helpful for BC residents affected by the recent flooding, who have that additional coverage, there are exclusions and limitations to this type of insurance.
What Does Flood Insurance Specifically Cover?
- Physical structure
Structural parts of your home are usually covered, including foundation walls, anchorage systems, staircases, permanent panels, wallboards, cabinets, and bookcases. Keep in mind that the policy only covers damaged structures. If five of your seven cabinets were destroyed, you would receive compensation for five cabinets, not a complete replacement of your entire kitchen cabinetry. Carpeting and window treatments may also be covered.
- Essential systems
Anything that is considered “essential” to your home is also usually covered. This includes electrical, plumbing, water heaters, furnaces, central AC, heat pumps, water tanks and pumps, sump pumps, fuel tanks, cisterns, and solar energy equipment.
- Personal property
Anything listed on your homeowner’s coverage, including appliances, is usually covered under your flood insurance as well. This includes fridges, dishwashers, washing machines, dryers, portable window ACs, furniture, clothing, electronics, and other valuables. There may be a limit on your personal property coverage due to flood, so you’ll want to ensure all of your valuables are fully covered with additional riders.
- Certain events
Some scenarios fall under the term “flood.” For example, groundwater seepage or a mudslide might also be considered flooding, even though it doesn’t fall under the technical definition. If a community water main breaks, your flood insurance should cover it as long as it damaged your home and at least one other person’s home. Or let’s say your neighbour’s swimming pool floods and impacts your home: the damage caused by their flood might be covered under your flood insurance.
What Are Common Flood Insurance Exclusions?
Flood insurance is no different than other parts of your insurance policy: there are always exclusions. Some common exclusions include:
- Sewer backup
Flood insurance won’t cover you if your sewer line or the community sewer line backs up, unless the sewer backup was caused because of another source of flood. Hence the existence of sewer backup coverage.
- Earth movement
Your flood insurance won’t cover the loss that is caused by earth movement, even if a flood produces the earth’s movement. You’ll want to consider earthquake coverage for earth movement-related claims.
- Mildew or mould
Flood insurance may cover mould or mildew damage that is a direct result of a covered flood. However, it will not cover any moisture-related incidents if it was caused by negligence on the part of the property owner and was not attributable to a flood.
- Outdoor property
Anything that is outside the walls of your primary structure, except for a detached garage, is usually excluded from flood insurance. Trees, plants, wells, decks, patios, fences, pools, and hot tubs are typically not covered.
Most vehicles that are self-propelled, like cars, are not covered under flood. Check to see if your auto insurance will help cover flood damages if your car is parked in a garage or on the street during a flood.
Any cash, currency, precious metals, or valuable papers (stock certificates) are typically not covered by flood insurance. This is because it’s hard to prove ownership, so there are higher incidents of fraud.
- Additional living expenses
Most flood insurance policies won’t help cover any temporary living costs while you’re displaced from your home after a flood. In some cases, your overall homeowners’ policy may offer temporary living expenses for covered perils, but it may not include flood.
- Internal floods
Flood insurance doesn’t cover any water damage that originates in your house. That means it won’t cover floods from plumbing issues, broken pipes, or sewage backups.
(For more information on common inclusions and exclusions please visit: https://www.insuramatch.com/learning-center/common-flood-insurance-exclusions)
Another important note: most flood insurance policies take 30 days to kick in after purchase. This is the insurer’s safeguard to ensure people aren’t buying insurance “last minute” after hearing about an impending major weather event.
The key thing to note with water damage under a home insurance policy is that the incidents must be sudden and accidental. A typical home insurance policy will not cover damage due to leaks or seepage over time. (For more information please visit: https://discover.rbcinsurance.com/water-damage-what-am-i-covered-for/)
The provincial government has also announced a Disaster Financial Assistance (“DFA”) program to help BC residents affected by the flooding and/or landslides from November 14-16, 2021. DFA is available to homeowners, residential tenants, business owners, local governments, Indigenous communities, farmers, and charitable organizations that were unable to obtain insurance to cover disaster-related losses. By regulation, DFA is unable to compensate for losses for which insurance was reasonably and readily available. The DFA coverage can be found here; applications must be submitted to the provincial government by February 12, 2022.
If you have any questions or wish to seek more information about your home insurance policy, please contact our office for a FREE HALF HOUR CONSULTATION with one of our lawyers.
This article does not constitute legal advice.