Spring flood risks highlight lack of insurance for Canadian homeowners: experts

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As the spring season brings higher flood risk to Canadians, as seen in British Columbia recently, experts say many homeowners remain without adequate insurance to cover extreme weather's damage to their homes.

"I would say that Canadians in general are not truly aware of the risks that their homes are exposed to, and the exposure they have to extreme weather events and the potential losses they could experience," said Michelle Laidlaw, associate vice-president of The Co-operators Group Ltd.'s national product portfolio.Flooding is the biggest under-insured climate risk in Canada, said Victor Adesanya, vice-president of insurance at DBRS Morningstar, especially during the spring thaw.

IBC has said overland flood coverage for damage from overflowing bodies of water is generally only covered with an add-on to insurance plans. It may not even be available if you live in a known flood plain, it said. "Incidents of extreme weather, including flooding, they've become more sudden, more frequent and more severe. And so what we're seeing is an increase in pricing, an increase in the cost of insurance for Canadians," said Laidlaw.

That might seem counter-intuitive, but it's likely because insurance premiums are based on risk, said Laidlaw.Laidlaw said it's possible there will be an uptick in interest among higher-risk homeowners as they rebuild from Fiona's damage, but that hasn't happened yet. There are programs in other countries that give insight into what kinds of models are possible, said Adesanya. For example, the U.S. national flood insurance program is government-driven, while in the U.K. it's industry-driven, with risk shared across insurance companies, he said.

 

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