Protecting homes against flood: What to tell your clients

Catastrophic flooding in communities has resulted in an average 8.2% reduction in the selling price of houses — and material implications on insurance, according to a new report by Intact Centre on Climate Adaptation and the University of Waterloo.   

The report also found a 44.3% reduction in the number of houses listed for sale following a catastrophic flood, and a 19.8% increase in the average days a house spent on the market.  

Treading Water: Impact of Catastrophic Flooding on Canada’s Housing Market focuses on Grand Forks in B.C.; Burlington, Toronto and Ottawa in Ontario; and Gatineau, Quebec. These five cities experienced one or two catastrophic floods causing at least $25 million each in insured damage between 2009-20. 

“We can see that flooding is predominantly the costliest extreme weather event to Canadians,” says Kathryn Bakos, director of climate finance and science at Intact Centre on Climate Adaptation. “A large portion of those losses coming from flooding manifesting itself as flooded basements.”  

The report also cited previous data that found a 20% to 25% increase in Canadian home insurance premiums between 2015-19, with more than half of this attributable to flood damage.  

What’s more, cap rates for basement flooding are trending lower, according to the report, while the percentage of homes across Canada deemed uninsurable due to flooding is trending higher.  

 

“We’re not just talking about catastrophic loss claims and the impacts to insurance,” Bakos says of the findings. “We’re now talking about the insurability and the instability of the Canadian housing market.”

With this new data, Bakos says the insurance industry is “in a really good position to be able to provide their customers with information on how to protect their homes.” 

She urges collaboration between insurers, other financial service providers and homeowners to reduce flood risk and insurance impacts, and says insurance companies need to deploy home flood protection.  

Home owners can take cost-effective measures to mitigate flood risk, she says. “We should have insurers, mortgage providers and real estate agents providing that information of what a homeowner could do.” 

The report suggests several ways for homeowners to reduce flood risk, including: 

• Home flood protection guidance: Municipalities, banks, insurers and real estate associations should distribute guidance to home owners on how to lower the risk of basement flooding.  
• Climate Adaptation Home Rating Program (CAHRP): The federal government should link the CAHRP to EnerGuide home energy audits.  
• Flood risk maps: The federal government should update flood risk maps and ensure they are publicly accessible.  
• Residential flood risk scores: The federal government should develop a home flood-risk scoring system based on postal code (as already exists in the United States).  
• Natural infrastructure: All governments should commit to retaining and restoring natural infrastructure (forests, grasslands, wetlands) to limit current and future flood risk.  
• Community flood risk mitigation: Communities should act now to identify and protect areas at high risk of flooding. 

Although developers should not build on floodplains, community measures should be in place if they do, including publicly available flood maps, Bakos says.  

She adds that currently available flood maps are out of date. “If you make them more recent and continue to update them on a yearly, or every two-to-three-year basis, then that would aid city planners, developers, engineers and municipal risk officers to identify and remediate areas of high risk,” she says. 

Analyzing the data in the report was not difficult but obtaining it proved to be problematic, because researchers could not gather the data directly from national or provincial associations.  

Instead, they had to obtain it from individual real estate brokers across the studied communities, Bakos says.  

“There was no central, publicly available hub where we could go to obtain this information,” she says. “As a homeowner or as a renter, I would want to be able to understand how this could potentially impact where I’m living, and that that wasn’t available to us.”  

 

Feature image by iStock.com/CHUYN