Is flood insurance even necessary in Canada?
In Canada, Spring brings green grass, flowers, and warm sunny days. It also brings melting snow, heavy rains, and flooding. Events such as the Calgary flooding of 2013 were a stark reminder that the risk of flood continues to worsen as weather patterns change across the country.
One important distinction to make is the difference between flooding, and ordinary water damage. While flood damage does involve water, it’s important to note that insurance deals with floods very differently than it deals with ordinary water losses. To be specific, “flood damage” means loss or damage caused by surface water originating from rain, snow, overflowing rivers, lakes, and other bodies of water. Under most home insurance policies, “water damage” does not include flood; “water damage” means sudden and accidental loss or damage caused by pipe breaks, failed water heaters, overflowing bathtubs or toilets, etc. – flood is not included in a home insurance policy’s basic water damage protection.
Historically, insurance for residential flooding has been almost impossible to find in Canada. One of the core reasons that flood insurance has been difficult to obtain is adverse selection: only the people who have a high risk of flood would purchase the insurance. Since the only people purchasing insurance would be the same people to draw heavily upon it when a flood occurs, the cost of this insurance would be impossibly high for these few customers to pay. However, as the weather continues to change and inland flooding becomes more common, many more homeowners and renters wish to purchase this coverage; as a result, it is now becoming possible to offer inland flood coverage because enough customers are interested to make the coverage affordable and sustainable.
Some providers, such as Square One, have started to offer inland flood protection for most policies in Canada; 94% of Canadian customers are eligible for this coverage. Eligible new customers will receive this protection automatically, and eligible existing customers will receive this protection automatically on their policies’ anniversary date. Existing customers who do not wish to wait can contact Square One directly to have this coverage added to their policy immediately.
Certain homes in very high-risk territories may still not be eligible for inland flood insurance coverage with private insurance providers. For those homeowners and renters, there are financial assistance programs in place; for example, in British Columbia there is the Disaster Financial Assistance Program. It is critically important to note that as of May 2015, the Disaster Financial Assistance Program has indicated that they may no longer provide assistance to individuals who could have purchased private flood insurance and either chose not to, or failed to make an effort to do so. This puts the onus on homeowners and renters in British Columbia to thoroughly research the options available to them, and to purchase private flood insurance if it is available for their home.
To help homeowners and renters find coverage that will protect them from inland flooding, Square One has created www.getfloodinsurance.ca. This website explains water damage and flooding in detail, and provides a summary of the different insurance providers in Canada who currently provide inland flood coverage for homeowners and renters. Customers who wish to learn more about inland flood insurance are encouraged to visit this website for more thorough information.
Most home insurance policies can provide broad protection against other types of water damage, including such losses as sewer backup, entry of water through an opening in the roof, burst water mains, and more. For more detailed information on water damage, visit our other resource article on that subject.
Do I really need earthquake insurance?
Hopefully, we’ll never need to use it, but earthquake insurance is an important coverage available throughout Canada. As we know, some areas are more likely to be hit by an earthquake than others, but as one occurs every 30 seconds, wouldn’t you rather be safe than sorry?
If you currently have home insurance, it’s important to be aware that most policies exclude damage caused by earthquakes. It is usually a rider which must be added to your policy for an additional premium, and with a separate deductible. However, depending on where you live, and the deductible you choose, earthquake insurance can be quite affordable. Square One Insurance includes earthquake coverage on all of its policies, so you never have to worry.
Special note for condo owners: If you live in a condo, and your building is damaged in an earthquake, each unit owner may be assessed a portion of the building’s deductible. On your condo unit owner’s policy, you can purchase coverage to protect you in just such a case. However, it will only protect you if the loss is one that is covered on your condo policy. So if you don’t carry earthquake insurance on your contents, your policy will not respond to cover any assessment due to earthquake.
Protecting your home
If you live in an earthquake zone, there are some things you can do to minimize the damage to your home, should a large quake occur:
Reinforce the foundation, walls, roof to help withstand lateral and vertical earth movement. You may want to contact a professional to give you some tips, and help with the improvements. Listed are some of “Earthquake Canada” recommendations:
- Add shatter-resistant film to windows or use tempered or wired safety glass.
- Add restraining elements to minimize twisting and cracking, if your house is built in a non-symmetrical style.
- Make sure any support posts are well braced and are anchored to the ground.
- Use flexible pipe connections for gas appliances, if your home is heated by natural gas, to help prevent rupturing. Seismic-activated gas valves can be installed to shut off the gas during severe earthquakes.
- Repair cracks in exterior blocks or brickwork to prevent toppling during an earthquake.
- Prevent bricks from falling through your ceiling, by reinforcing the ceiling below any chimneys. You can also add a steel collar-style brace to the chimney.
- Make sure your roof tiles are well secured, especially ones that are vulnerable to quakes, like clay tiles.
Secure the contents of your home, so they are less likely to be damaged, or cause injury, in a quake.
- Closed hooks or safety hangers for pictures and mirrors will prevent damaged items, broken glass, and possible injury.
- Non-skid, padded matting under breakables, like tv’s, will prevent them from sliding.
- Childproof catches for cabinet doors and rails for display cases will prevent cupboards opening, and contents flying across the room.
- Flammable items and household chemicals should be kept secured in an upright position, away from heat.
- Valuable items and important documents should be kept in a fire-resistant place.
- Screw or bolt bookshelves securely to walls.
Take a look at the site surrounding your home:
- Check for trees that are in poor shape, or are leaning.
- Look for power lines that are close to your home. These could be a hazard if they fall onto the house.
- Reinforce additions to the home, such as canopies or porches, so they don’t separate from the main house.
- Check for any other possible hazards, like nearby reservoirs or water towers, as well as buildings in poor repair. If there is a major fault in your area, relocating may be the best solution, if the risk is high enough.
Consider the soil conditions in your area. Contact a soil engineer, or a local building authority to check the type of soil on your property.
- Poor soil: If the soil is poor, your home’s foundation may need to be reinforced. Poor soil may consist of deep loose sand or gravel, silty clays, or granular soils that are soft or saturated. Saturated soil can change from solid to liquid during an earthquake. The soil turns to quicksand, which cannot support a foundation.
- Good soil: Bedrock, which consists of deep, unbroken rock formations, and other stiff soils are considered to be good types of soil when it comes to withstanding an earthquake. Vibrations are much less likely to be transferred through your foundation, to the house above.
Making an earthquake plan
We all know it’s a good idea to have an earthquake kit on hand (and in your car if you can’t make it home) in the event of an emergency. Some items to include are:
- Water: enough for three days, based on 12 litres per person.
- Food: enough non-perishable items for three days. They should be easy to carry and nutritious.
- Medications: enough for three days. Make a list of your prescription medications.
- Important documents: Keep copies of your driver’s license, passport, and birth certificate in a safe place away from home.
- First aid supplies, sanitation and hygiene: household bleach, soap, towels.
- Tools and supplies: utility knife, flashlight, battery powered or wind-up radio, and duct tape.
- Clothing and bedding: have a change of clothes for each family member and blankets.
Some other things to plan for:
- Pick a meeting place for your family if you have to evacuate. Pick a spot close to your home, as well as one outside your neighbourhood if you can’t all get home right away.
- Make a list of emergency contacts, like the police and fire department. Add the name of someone outside your province that each of you can contact to let the rest of the family know you are alright.
- Plan 2 or 3 evacuation routes, in case some roads are blocked.
Check out the Government of Canada’s video “Get Prepared” for more information. You may also want to review the Natural Resources Canada website.
Insuring your home
If you live in an earthquake zone, and there are a few in Canada (not just BC), you must consider earthquake insurance. We all hope the “big one” doesn’t hit in our lifetime, but just in case, as mentioned above, there are many things you can do to prepare for an earthquake. Adding earthquake insurance to your home insurance policy is one of the things you can do to be prepared.
Traditional home insurance policies don’t include loss or damage caused by earthquakes; rather, you must specifically request that it be added to your policy. There will be an additional cost to add this coverage. Earthquake insurance typically has its own limit of insurance as well as a separate deductible, which is usually higher than the base deductible.
While earthquake insurance can be pricey for those who own houses, Square One recommends it always be purchased on primary residences. It’s simply not worth the risk of going without earthquake insurance. The cost varies depending on where you live, and the risk of an earthquake occurring, as well as the amount of coverage required, and the deductible selected. For those renting their homes, or living in apartments or condos, earthquake insurance usually ranges from $5 to $50 per year. At Square One, our home insurance policies automatically cover loss or damage caused by earthquakes. No paying extra.
Some people have little to no confidence that home insurance companies will be able to pay covered claims resulting from a major event. The reality is that numerous earthquakes and other disasters occur around the world each year. Insurance companies factor earthquakes into their prices, building reserves to pay for resulting claims. Some of the other things that help ensure insurance companies can meet their commitments:
- Insurance companies buy catastrophe protection from reinsurance companies. This helps spread the risk (and cost) of disasters globally.
- Insurance companies are heavily regulated by both provincial and federal governments. Among other things, these governmental bodies supervise the solvency of companies.
- Insurance companies must be members of the Property and Casualty Insurance Compensation Corporation (PACICC). If an insurance company fails, PACICC will automatically respond to all valid claims for participating members. PACICC is similar to the Canadian Deposit Insurance Corporation, which protects savings in case a bank fails.
What does earthquake insurance cover?
Earthquake insurance covers loss or damage caused by the tremor or shaking from an earthquake. It does not cover loss or damage caused by landslides, snowslides or other forms of earth movement. Nor does it cover loss or damage caused by tsunamis or tidal waves, even if the tsunami or tidal wave was due to an earthquake.
If you own a house, your earthquake insurance will typically cover loss or damage to your building and your personal property. Make sure you also carry “Additional Living Expense” coverage on your policy, so it can cover any additional living expenses you incur if you’re unable to live in your home while it’s being repaired after an earthquake.
If you own a condo, your condo (or strata) corporation is responsible to insure the building. But to cover your personal property and additional living expenses, your individual condo policy must include earthquake insurance. It may also cover assessments made against you because of a shortfall in your condo corporation’s insurance.
And if you rent your home, earthquake insurance on your tenant policy will typically cover your personal property and additional living expenses.
Hopefully we’ll never need to use it, but earthquake insurance is an important coverage available throughout Canada. Some areas are more likely to be hit by an earthquake than others, but as an earthquake occurs every 30 seconds, wouldn’t you rather be safe than sorry?
If you currently have home insurance, it’s important to be aware that most policies exclude damage caused by earthquakes. Earthquake coverage is usually available as an optional addition which must be purchased for an additional premium, and with a separate deductible. Depending on where you live, and on the deductible you choose, earthquake insurance can be quite affordable. While many insurance providers won’t add earthquake coverage unless you ask for it, Square One Insurance includes earthquake protection on all of its Canadian policies, so you never have to worry.
Condo owners should take special note: if you live in a condo building that suffers damage in an earthquake, each unit owner may be assessed a portion of the building’s deductible. On your condo unit owner’s policy, you can purchase coverage to protect you in just such a case. However, it will only protect you if the loss is one that is covered on your condo policy. So if you don’t carry earthquake insurance on your contents, your policy will not respond to cover any assessment due to an earthquake.
If you live in an earthquake zone, and there are a few in Canada (not just BC), you must consider earthquake insurance. We all hope the “big one” doesn’t hit in our lifetime, but just in case, there are many things you can do to prepare for an earthquake. Adding earthquake insurance to your home insurance policy is one of the things you can do to be prepared.
For earthquake information, including what to do during an earthquake, go to the Government of Canada’s website: Earthquakes in Canada. And, if you’d like to learn more about earthquakes across Canada, feel free to read this in-depth article from www.insurancejournal.com.
To learn more about earthquake insurance, visit Square One’s earthquake insurance page. For more information on inland flood coverage or to get a quote on your home insurance, contact Square One at 1.855.331.6933.