FLOOD CLAIMS
THE FLOOD
OF FLOOD
CLAIMS
BY: JOSHUA SAMSON AND
STEVEN BARNETT
F
loods used to be a rare occurrence
in the province of New Brunswick,
but over the past two years, New
Brunswick has experienced historic
spring water levels. Whether the
cause of these significant water levels is
due to heavy rainfall or climate change
is a topic for another day. But changes in
flooding frequency will surely continue to
affect homes and businesses in the years to
come.
During this decade, water damage now
outranks fire as the leading source of claims
among homeowner insurers, according to
the Insurance Bureau of Canada. Water
damage claims are now approximately 44
percent of total claims dollars, with fire
claims at 30 percent.
According to CBC News, over 20,000 New
Brunswicker's live in known coastal or
inland flood hazard areas. So flooding is
bound to be a recurring and expensive issue
for insurers.
Steven Barnett is a shareholder and senior
lawyer at Foster & Company, his broad-
based litigation practice includes insurance
defence, commercial litigation, complex
multi-party actions, product liability,
medical and professional malpractice
and personal injury cases throughout the
Maritimes.
For many homeowners, these sorts of
risks are relatively new. Not only are some
homeowners unaware that they lived in a
floodplain until they are flooded, they are
also unaware that they are not covered for
the spring floods until it is too late.
Thus, it is not only important for a
homeowner to understand the steps they
should take to ensure they can cover their
water damage; it is also important for
brokers and the client to communicate on
these possible risks in the long-term.
INSURING WATER DAMAGE
A home is one of the biggest investments
and purchases that most people make
in their lives. Homeowners affected by
flooding who return to their damaged
property will need to deal with
water damage, mould, contaminated
household items, and smaller debris such
as nails that may have washed onto the
property.
Joshua Samson is an articling clerk with
Foster & Company. He is focused on
practising in the areas of insurance defence,
personal injury, employment law, human
rights and aboriginal law.
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Many Atlantic Canadians assume that
their standard home insurance covers
all water damage. Coverage of this loss
depends on the type of package that you
purchased. According to the Insurance
Bureau of Canada, in 2017 only 10
percent to 15 percent of Canadians had
overland flood insurance.
It is essential for insurance brokers
and their clients to have a conversation
about what is considered insured and
uninsured perils.
For example, the water damage that
most homeowners historically have
experienced arises from issues involving
plumbing. Sudden plumbing failure
is covered under most, if not all, basic
home insurance policies.
TYPES OF WATER DAMAGE NOT
COVERED UNDER A BASIC POLICY
Due to the recent floodings in various
parts of Canada, uninsured perils
are becoming more of an issue for
homeowners.
Sewage backup has become a regular
issue after flooding where municipal
drainage systems overflow and send
water back through drainpipes and into
an insured’s home. Many homes do
not have back-flow valves installed to
protect against this peril.
Groundwater flooding occurs when
there is an influx of water from
underground natural sources that seeps
through basement walls, foundations,
or floors. Groundwater flooding is not
covered by basic home insurance.
Overland flooding is water that comes
into the home from the outside,
normally through the basement
windows/doors/walls and house
foundation. Insurance for overland
flooding from rising water levels is a
relatively new coverage. The Insurance
Institute reported that this coverage
was considered by insurers in 2014 and
has only been offered by insurers across
Canada since 2015.
In 2016, the University of Waterloo
conducted a survey on perceived flood
risk. They surveyed 2,300 Canadians
who live in high-risk flood areas.
Among the homeowners, the survey
showed that 70 percent said they had
not been contacted by an insurance
company about newly available overland
flood insurance.
COMMUNICATION IS KEY
Most times, insureds only talk to their
insurance brokers when obtaining
or renewing their policy. Often
times, the proper questions are not
asked. With the rise in the number
of floods occurring in Canada, there