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The BCREA Blog is a platform for sharing the latest education news, economics statistics, issues relating to the profession and links to valuable resources for REALTORS®, stakeholders and the public.

Residential Flood Insurance, Demystified

Published Jun 08, 2017

Aaron SutherlandBy Aaron Sutherland
Vice-President, Pacific, Insurance Bureau of Canada

  Rivers, streams, and lakes overflowing, and brigades of volunteers vainly trying  to save the homes around  them by deploying sandbags and anything else they can find to stop the rising waters. While we've seen these  images in the media many times, no one expects a flood to happen in their community – yet it does. And as we've seen lately, as a country, we're failing to protect Canadians from flood and to educate them about this increasing risk.

Case in point – Canada's property and casualty (P&C) insurers have seen water damage claims skyrocket in the last decade. Similarly, governments' annual flood-related expenditures have risen from $40 million in the 1970s to about $600 million this decade. Against this backdrop, the need for overland flood insurance becomes clear.

Overland flooding occurs when a large amount of rainfall or snow melt causes a large body of water to overflow onto dry land. Home insurance in Canada hasn't traditionally covered losses or damage caused by such events – until two years ago. Since then, several P&C insurers have introduced overland flood insurance products which, while new to the market, provide homeowners with a new level of financial protection. Flood insurance may not be available everywhere or for every type of flooding (for example, it's not available for coastal flooding), but it's gaining traction as more insurers add it to their portfolios.

About 40% of British Columbians have already purchased some form of flood insurance. This is encouraging, especially when you consider the lack of a financial safety net that otherwise exists when a flood occurs. Government disaster assistance is strictly intended to replace or restore essential property. It doesn't help to replace personal items like bicycles, jewelry, and artwork, or if a secondary home is damaged.

Property owners need to take the initiative before they become statistics. Insurance representatives have information about overland flood insurance and how to reduce flood risk.

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