Why your clients may not have the high ground on overland flood risk

Many homeowners opt not to buy overland flood coverage and this could leave them uninsured in the event of a severe rain storm.

“Overland flooding is any water that comes into your house through the windows or door or anything that is not the pipes. Any serious rain storm might cause that to happen,” said Jameson Berkow, managing editor of RATESDOTCA Group Ltd., in a recent interview.

This means your client can still be at risk even if the property is not on a river flood plain, warned Berkow.

The risk of overland flood “really does not have as much to do with the location of your home as you are thinking,” said Berkow. “That is something, I think, that most Canadians still do not know and something that the industry has not really rallied behind in terms of getting that message out.”

If a client lives at the top of a hill, that client does not need to be as concerned about overland flood as the owner of a property at the bottom of the hill, said Berkow.

“But the risk [of overland flood] is not zero, to your house, no matter where you live.”

This means it is important for consumers to talk to brokers about optional additional coverages.

“I can definitely say, anecdotally, that [overland flood coverage] is not an incredibly common purchase for homeowners even in a flood plain,” said Berkow.

RATESDOTCA operates a comparison website for consumers shopping for auto, home, and travel insurance as well as mortgages and credit cards.

New analysis from RATESDOTCA shows the average cost of home insurance has grown at more than three times the rate of inflation over the past decade as personal property damage claims have grown 42%, Canada-wide, nationwide over the same timeline, RATESDOTCA said June 2 in a release.

Water damage and flooding is the single largest cause of personal property claims in Ontario, Berkow told Canadian Underwriter in an interview.

Coverage for overland flood was generally not available to Canadian homeowners until 2015.

Home insurance normally covers sudden and accidental bursting of plumbing pipes and appliances, but damage may not be covered when freezing causes the escape of water, the Insurance Bureau of Canada reports.

Many insurers now offer residential overland flood coverage for the majority of homes across Canada the coverage is optional and based on risk, says IBC.

“Even if you don’t live by a lake or river, your home could still experience flood damage in a variety of different ways,” says IBC. “Water damage in a basement due to a sewer backup is only covered if specific sewer backup coverage has been purchased.”

Feature image via iStock.com/thefurnaceroom