Last year's flood in Southern Alberta cost the insurance industry $1.7 billion, while severe weather in other parts of the country pushed the national total up to more than $3 billion.
With climate change leading to severe weather, the insurance industry is looking for ways to limit its exposure to floods, wind and hail. Residents both inside and outside of flood zones can expect their premiums to rise and their coverage to shrink as insurers try to limit their losses.
Jeff Burke, president of an insurance agency in High River called Western Financial, said Albertans need to closely read their insurance policies. Coverage limits and deductibles could change, even for those who weren't affected by last year's floods.
“It's changing with regard to the price, and the deductibles have likely increased, and there may be limits imposed,” he said.
Overland flooding concerns
Brian Maltman, an ombudsman for the insurance industry, said insurers still haven't figured out how much policies need to change.
“Rates are being looked at and the whole flood risk is being looked, even sewer backup,” he said.
Maltman's office received 130 complaints from Albertans about their insurance policies after the flood last year. Many were surprised to learn that there was no overland flood insurance, including Tom Carter’s neighbours in Calgary’s Elbow Park.
“Everyone quickly found out that overland flood coverage didn't exist in Canada, which was news to a lot of people,” said Carter.
This spring, a Calgary company offered overland insurance to some homes for damage caused by water entering a home through doors and windows.
Shop around, says industry expert
During the flooding last year, Carter’s basement filled with sewage back up.
He was denied insurance coverage because the sewage damage was caused by overland flooding, but Carter fought back and negotiated a settlement with his insurer, AMA Insurance, in which insurance covered half his damage.
“I wouldn't say that we're happy, you know, it was a bit of a disappointment.”
Carter's insurance company probably isn't happy either. AMA Insurance had $25 million in underwriting losses last year. TD Bank said that it lost $170 million due to the Alberta floods, while RBC lost $14 million.
“We don’t track average premiums on home insurance policies, but we’ve heard that in some instances people are looking at a 15-20 per cent increase,” said Bill Adams, a spokesman with the Insurance Bureau of Canada, which is the umbrella association for the industry.
“In some cases it’s less. I guess that speaks to the importance of shopping around. Not all insurance companies have been affected to the same degree when it comes to extreme weather events.”