Update your flood insurance now, say industry experts

As Toronto residents face property damage following a severe rainstorm earlier this month, insurance experts are recommending homeowners and renters consider flood protection now — as precipitation rates are predicted to increase due to climate change. 

"You don't have to live beside a lake in order for you to have a flood," said Anne Marie Thomas, director of consumer and industry relations with the Insurance Bureau of Canada (IBC).

She said the bureau saw reports of water coming into people's homes via window wells due to the sheer amount of flooding on July 16.

"It can really happen to anyone," she said. 

Thomas and several other insurance experts say that flood-related insurance is not yet standard in homeowner policies. That's why they say it's important to advocate for your needs to a broker, and be aware of the limits insurance companies place on claims — in order to be prepared. 

The Canadian insurance industry is expecting to see nationwide claims increase from $2.1 billion annually in 2020 to $5 billion annually by 2030 due to climate change, according to a 2020 report by the Insurance Institute of Canada, a non-profit. 

"What people should do now … is make sure you have that coverage on your policy," said Thomas.

It's too early to estimate how much Toronto's most recent storm has cost in insurance claims, said Thomas. However, she predicts the scope is similar to the city's 2013 storm, which resulted in $1 billion insured losses. 

Not all water damage coverage is the same with every insurance company or within individual policies, she said. 

"Some companies may have a certain amount that they will only pay, maybe they say 'we're not going to pay more than $25,000 for any one sewer back-up claim,'" Thomas said.

That's why she recommends people speak to an insurance professional and advocate for themselves. "Think about things like how much, what's the value of the possessions that you have in your basement," she said. 

Insurance may not be available for every property. The IBC estimates about 10 per cent of all homes in Canada are uninsurable due to high risk of repeated flooding.

That means residents need to pay close attention to their needs, said Daniel Ivans, an insurance broker with Ratesdotca.

"It's quite common for insurance companies to either not offer some of these coverages or otherwise cap them," he said.