Ottawa

Highrise condo buyer denied insurance due to flood emergency

Aviva Canada is denying home protection insurance for a new highrise condo. The reason? Ottawa's state of emergency, declared in April due to flooding in some parts of town.

Aviva Canada turned down Inna Nei, citing state of emergency declared in April

High, dry and uninsured: Pat St. George said it's 'ludicrous' Aviva Canada won't offer a home protection policy to his wife, Inna Nei, for her highrise condo. The couple recently separated. (Supplied)

When Pat St. George and Inna Nei separated recently, they decided to sell the family home and move into their own condos in different areas of Ottawa.

St. George was able to transfer their home protection policy to his new residence, but when Nei tried to take out a policy for her new place on Richmond Road, the company they'd been dealing with for about six years, Aviva Canada, said no.

I can understand why they wouldn't want to sign policies on flood-affected properties, but to paint the whole city or whole region as non-insurable is ludicrous.- Pat St. George, Aviva Canada customer

According to St. George, the company cited Ottawa's state of emergency, declared on April 25 as floodwaters threatened parts of the city.

St. George said that makes no sense, especially since Nei's condo is in a highrise and didn't flood. 

"I can understand why they wouldn't want to sign policies on flood-affected properties, but to paint the whole city or whole region as non-insurable is ludicrous," St. George said.

Common practice

In a written statement to CBC, the company explained: "Like most insurers, Aviva Canada does not sell new home or automobile policies located in an area that is under a flood alert or flood evacuation order."

Aviva said once the state of emergency ends, it will resume offering policies to homebuyers in Ottawa.

Aviva also cancelled St. George's added water protection for his condo, which covers sewer backup and overland flooding, until the emergency is lifted. 

"I find it peculiar because we can't be the only ones in Ottawa who are buying property, and the state of emergency has been in effect since April," St. George said. "I can only imagine how many people are being affected by this." 

According to the Ottawa Real Estate Board, 2,032 residential properties were sold in Ottawa in April. Each one of those buyers would need home insurance to acquire a mortgage.

'Conflicting interests'

Pete Karageorgos, director of consumer and industry relations with the Insurance Bureau of Canada, said insurance companies are forced to make tough decisions during emergencies such as the this spring's flooding or the destructive wildfire in Fort McMurray, Alta, in May 2016.

"Insurance companies are not in the position to expand during states of emergencies and take on more risk,"  Karageorgos said.

"Regardless if you are right by the water's edge or you are well inland or in a highrise, the insurance companies, not all, but many, are saying, 'We're holding off taking on more risk until the situation is normalized.'" 

Pat St. George was shocked when insurance companies told him Ottawa's state of emergency was the reason why they weren't willing to insure his wife's new condo. 7:37

Insurance companies must consider their current policy holders, Karageorgos said.

"It does seem unfair [but] you've got conflicting interests, and that's where the challenge is taking on new policies." 

Karageorgos said there are some insurance companies that will offer policies during states of emergency. 

Nei said she called six companies seeking a policy for her condo. Four said no, and only two said yes.

"You are kind of at the whim of getting any [company] you can find to give you a policy," St. George said. "Who's to say [Nei is] getting a fair rate?"

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