Water, Water, Everywhere: Protecting your HNW Property from a Flood

Flooding is the most common natural disaster in Canada — and possibly the costliest.¹ In recent years, flooding has become almost too common, with historic flood events occurring annually. In fact, half of the most expensive flooding events have happened in the past decade, including the 2021 floods in British Columbia and the 2013 flooding in Toronto and Southern Alberta.²

But it was Hurricane Fiona that hit the big time, reaching seventh place on the list of costliest disasters in Canadian history, with a price tag of more than $800 million.³

Overland water coverage is now an integral component of home protection. Overland water insurance didn’t become a product in Canada until 2015, and few paid attention to this coverage option until the historic floods in BC. Despite these events, few Canadians have embraced overland water coverage or understand that it is not part of the basic insurance policy coverage.

The Trouble with Water

According to the Canadian government, more than 20% of the country’s homes are at risk for flooding.⁴ And many cities have major structures sitting atop flood zones.⁵ No one wants to believe their family photo albums or other heirlooms could be destroyed in a flood, but overland water insurance — a coverage intended to protect Canadians from damage caused by freshwater flooding, groundwater and torrential rains — can be challenging to understand. Some issues include:

• Inconsistent coverage offerings. Given the relative newness of this insurance, no standardized policies exist. Carriers offer different versions of the coverage, with unique limits and exclusions.
• Inconsistent flood mapping. The existence of nine different but approved flood maps means a property could be considered high risk by one carrier but only a moderate risk by another.
• Inconsistent rates. Homeowners are wary of purchasing coverage when they don’t understand the coverage, and rates can vary widely across different markets.

In addition, the newly created National Flood Insurance Program that’s expected to be available next year will add another layer of complexity. Under the flood program, coverage will be available to a small percentage of people unable to purchase other insurance, but even then, homeowners could find themselves uninsured or underinsured unless all parameters of the program are met.

3 Steps to Risk Mitigation

With flood risks increasing each year, Canadians need to consider what overland water insurance coverage to consider and what mitigation strategies to undertake to protect their properties.

Follow these three steps to best protect your property from flood risk:

1. Review the exposures. Whether flood risk comes from groundwater or sewer backup, snow melt or torrential rains, disaster can strike at any moment, often without warning. Consider the specific risks of your property: Is there a body of water nearby? Does snow generally melt quickly in the spring? How often is there heavy rainfall? How much concrete is on the property? Is there adequate drainage? If water can be found on your property, it’s important to ensure that it has someplace to go — so it stays out of the basement.

2. Mitigate the exposures. The next step is adding features to the property to protect it from water. For example, design a large drainage system to keep water away from the house. Install backflow valves to prevent water from flowing the wrong direction in the pipes. Add alarm systems to notify occupants when water is entering the structure in the wrong place.

3. Secure insurance coverage. Work with your broker to review all the overland insurance options available in your area and take the time to understand coverage offerings, limits and exclusions. Select the best coverage you can afford, understanding that securing lesser coverage may render the property ineligible for the national flood program or any form of disaster financial assistance. And above all, work with a broker who understands the risks and challenges of the overland water insurance market and can help you find the best solution in your area.

Contact a HUB Private Client Risk Advisor to learn more about protecting your property from floods.

¹ Public Safety Canada, “Adapting to Rising Flood Risk: An Analysis for Insurance Solutions for Canada,” August 2022
² The Canadian Press, “The 10 most expensive natural disasters in Canada by insurance payouts,” January 18, 2023.
³ Insurance Bureau of Canada, “Insured Damages from Hurricane Fiona Now Over $800 Million,” January 5, 2023
⁴ Government of Canada, “The risk of floods,” accessed August 6, 2023.
⁵ The Globe and Mail, “Building on river floodplains has proven costly and devastating to Canadians. A new Globe analysis reveals which cities are most at risk,” May 30, 2022.