Flood insurance that isn't there when you need it

Despite a summer of catastrophic flooding in Alberta and Ontario, few Canadians know they are not covered by overland flood insurance, the kind of insurance that covers water coming in windows and under the doors of their home.

Why most Canadian homes are not covered for catastrophic floods

The floods in Calgary this June cost the insurance industry $1.7 billion and there's more of the same in store because of climate change. (Canadian Press)

Canadian insurers have never offered overland flood insurance, the kind of insurance that could have covered the floods this summer in Ontario and Alberta that caused millions of dollars worth of damage.

But few Canadians know they are not covered, according to Blair Feltmate author of a new report that looks at how likely the industry is to cover the kind of flood damage where water gets in through a door or window.

“Surveys from before the events in Calgary and Toronto occurred demonstrated that about 70 per cent of Canadians believed that they’re covered for overland flood insurance  Unfortunately, the time they find out they’re not covered is when it has happened to them,” Feltmate said in an interview with CBC’s The Current.

Last week, the insurance Bureau of Canada revealed that the June flood in southern Alberta was the costliest natural disaster in Canadian history, costing the industry $1.7 billion. The July flooding in Toronto cost an additional $850 million.

The province of Alberta estimates it faces flood costs of more than $5 billion.

Yet many of those who suffered damage to their homes will not be eligible for federal disaster coverage because their home is not considered to be in a flood zone. Anyone who experienced uninsurable damage to their property as a result of the floods is eligible for disaster assistance from the province, regardless if their property was in a flood zone or not.

Feltmate, a specialist in climate change at the University of Waterloo in Ontario, points out in a new report that Canada is the only G8 country that does not offer overland flood insurance. Most private insurance policies cover only flooding that emerges through a sewer backup.

After talking to leaders of the biggest insurance companies across Canada, he discovered the industry is divided about whether it ought to offer overland flood insurance, with some industry executives saying it would be so costly most homeowners could not afford it.

“There could be substantially higher premiums [in flood plains]. The question is would they be affordable premiums and the answer is right now, we don’t know,” he told CBC.

But the insurance industry agrees Canada’s flood zone maps have to be updated – and a new set of estimates created taking into account the more extreme weather we are now experiencing because of climate change, Feltmate said.

Flood maps out of date

More than 900 communities across the country, including most major urban cities, were mapped for flood risk under a $50-million federal program begun in the 1970s. In most cases, the maps have not been updated since 1992 when the program was dismantled due to budget cuts.

The federal ministry of public safety has put out a tender asking for suggestions on how to update flood maps, but nothing is likely to go forward until next spring.

Cars were up to their doors in water after flooding covered Toronto's Don Valley Parkway on July 8. (Tony Smyth/CBC)

In the meantime, Canadians face more severe weather events, without insurance protection, Feltmate said. He cautioned that any community across Canada might be affected, not just Calgary and Toronto.

“Climate change is real. It has happened, is happening and will continue to happen. As a result of that we’re realizing extreme weather manifesting itself in flooding to an extent that we’ve never seen in the past,” he said.

Need consultation over flood risk and insurance

In addition to the mapping problem, there are issues with how Canadian communities channel water.

“Cities are places that not too long ago were fields and forests and so forth, but increasingly they are paved over and when you pave them over, water has less places to go,” he said.

Feltmate recommends holding a broad-based discussion of flood risk issues involving government, property and casualty insurers, banks, investors, developers and homeowners.

He also believes Canada should prioritize research in flood exposure risk in high density areas where there is greater risk of loss of life.

Feltmate was asked to speak to leaders of Canada’s biggest property insurers by insurance company The Co-operators, which paid for the report.


  • Anyone who experienced uninsurable damage to their property as a result of the floods is eligible for disaster assistance from the province, regardless if their property was in a flood zone or not. An earlier story had incorrect information.
    Sep 30, 2013 2:00 PM ET