As the weather turns warmer and we set our sights on the hot days of summer there is an issue that we often forget about: the rising potential for water damage.
In the insurance claims world, sunny days don't always mean good ones. As the temperature rises snow melts, rainfall increases and water levels rise. There are a myriad of problems that arise pushing us to turn to our insurance for help.
One of the issues that we see a lot of in the spring months is flooding. Naturally, if you or I think of floods, we think water. When we think water, we think water damage. "Didn't that broker say we had water damage? "
Unfortunately, the insurance companies don't see things as simply as we do. Any insurance policy is based on a contract. Within that contract, the wording of the coverages and/or exclusions become critical to determining if and how a loss or claim will be paid. Newsflash: Flooding is not covered as water damage.
What can I do about Floods?
In regards to flooding, there are very few companies in Canada who will offer flood insurance. The Insurance Bureau of Canada does not include coverage for floods in their base wordings, therefore it really becomes an exception to find an insurer who will offer flood coverage.
If this coverage is important to you, you need to speak to your broker or insurer and ask them if they have some solutions to offer. Never allow yourself to think that because you were told you had "the best policy available on the market" it covers things like flood.
You would be surprised at some of the exclusions that the "top of the line, VIP company" policies have.
We are fortunate to represent some of the top insurers and VIP insurers, and in a few cases - like with water damage they may exclude what other companies cover. It is a matter of offering coverages they think the majority of their clients would need. If you have concerns, its really important to review. We have one specialty insurer who will offer this coverage at Ogilvy. We also see many carriers who exclude this coverage - including many of the VIP carriers. This Insurance Bureau of Canada Video is a great generalized overview of water damage and exclusions/coverages. So if it is important to you, please get informed. It is your home and you do not want any unnecessary surprises!
So, what is covered?
In regards to water damage, there is no simple answer, since most companies chose to exclude or cover damage via specific clauses which, if even available, you would have to request to add to your policy.
Please ask the questions below, and take ownership of your protection. With water damage risks, it pays to be informed.
What to ask about if you want to check what the extent of the water damage coverage is on your policy:
What are the exclusions on my policy that pertain to water damage?
- Does my policy cover flood? Excluded by most insurers, a select few can offer it. Find out if your insurer is one of them. You normally have to apply for the coverage and have it "added" on to your policy.
- Does my policy cover water damage resulting from damage from burst pipes, heating systems or air conditioners? This is usually covered on a comprehensive homeowner policy with certain conditions. You will want to make sure your policy is ALL RISK or Comprehensive. Named perils, broad forms or Fire and Extended coverage policies may not cover this.
- Does my policy cover water that comes up from the sewer system? This is usually excluded in all basic policies. It can however be added via a water damage extension. Sometimes the extension covers water that comes from above and below ground, other times it requires two add-ons: Above AND Ground/Surface Water. This is one of the most important clauses to inquire about. It also often includes limitations of coverage and can often be sold in increments of $5000. Note that the clean up from water entering your hoem from a sewer back up often requires a minimum of $10,000 for clean up alone. There is a lot to consider with this coverage. VIP carriers often include it in the wording. Every policy is different in this regard.
- Does my policy cover damage if I am running a bath and the water overflows everywhere? All Risk or Comprehensive policies will normally cover this as "accidental escape of water from within a plumbing system" however, you want to make sure that you have this kind of policy. A Named Perils policy will not cover this.
- Is there water damage covered on my rental property, or vacant home? Usually policies that cover this type of home exclude the coverage. Some carriers may be able to offer something via an endorsement or addition, but in general it is excluded.
- Is water infiltration covered on my policy? Most insurers will offer coverage for this type of water damage upon your request (it is not automatic). However some prominent VIP insurers actually exclude this coverage.
As you can see, the specifics of water damage vary from policy type to insurance company. It is really important to ask and inform yourself about what your specific package includes so that if you do hear that water coming into your home or see that puddle on your floor, you know exactly where you stand.
Now that you've taken the worry out of water damage you can focus on the sunny days ahead!
Some additional Information on Water Damage from the Ogilvy & Ogilvy Blog
Some additional Information on Water Damage from the Ogilvy & Ogilvy Blog:
With aging municipal infrastructures and flash storms that dump many millimeters of rain water over a short time period, the incidence of sewer back-up and therefore sewer back-up related claims is rising.
Following damages sustained by a homeowner, building owner or tenant, who has purchased sewer back-up coverage, your insurer will seek to recover damages paid, from a responsible third party. A recovery can be made from a municipality if it can be proven that the sewer system is not adequate for the needs of the population. This responsibility may be shifting.
On January 1st, 2006, a bill entitled the “Municipal Powers Act” (Bill 62) was enacted. Basically, this bill provides municipalities in Quebec with more flexibility in the exercise of their administrative and regulatory powers. This includes municipal sewer systems. Municipalities will be able to call upon the provisions of this bill to deny their liability for damage caused to building or contents if the owner neglects or omits to install an appropriate device (back-up valve) to reduce the risk of sewer back-up. The municipality will be more likely to contest the action by pleading that the fault resides with the insured / owner of the property who violated the municipal by-law requiring the installation of a back-up valve.
This trend in Quebec could lead to a number of developments:
Higher premiums for sewer back-up coverage.
Restricted or refused coverage in areas already prone to this type of loss and,
Greater obligation on the policy holder to install and maintain back-up valves in their buildings.
We are monitoring insurance company reactions and will relay changing conditions to you as they develop.