Homeowners Adrift Assessing Flood Insurance

University of Waterloo study shows Canadians have spotty access to good information about the risks

Excerpreted article was written BY VERONICA REINER

Many of us don’t know the extent of our flood insurance coverage until after a claim’s in progress. But even for those interested in learning more about the risks, good information is hard to come by in Canada, according to a new study by researchers at the University of Waterloo.

The study examined available information for more than 300 communities across Canada that are classified as being high-risk for flooding, noting many homeowners are essentially on their own in figuring out the risks and what kind of coverage is needed.

Researchers found that 62 per cent of available maps did not meet the basic criteria for communicating flood risk information to the public. Professor of political science Daniel Henstra, who helped conduct the research, said this could potentially cost homeowners tens-of-thousands of dollars.

“Without that information, [people] are unlikely to be buying flood insurance or to be implementing any flood protection measures,” said Henstra.

“If you think about that, when there’s a flood, disaster assistance programs will pay some of the cost of that, but we found in most cases, in the average home, you’re looking at $40,000-$50,000 out of pocket even after disaster assistance. So if there’s no insurance, people could easily be defaulting on their mortgages. A flood like this could really ruin somebody.”

There are individual measures you can take to protect yourself from damages, such as buying the appropriate insurance, but good information isn’t always easy to come by, the study suggests.

While most incidents occur during snowmelt and spring rains, flooding can happen at any time of the year. For example, there was significant flooding in Elmira in June 2017 during the warmer summer months, in that case due to heavy rainfall in the northern part of the Grand River system.

The knowledge gap is one place insurance companies can be of assistance, especially as the industry adjusts to the implication of climate change and the threat of more intense storms and weather-related damage.

Those at the brokerage level are on the front lines of increased claims and requests for information about coverage.

That’s certainly been the experience of  Steve Wagler, director of sales at Josslin Insurance, who said he sees an uptick in activity after storms such as the one in Elmira.

“Everybody needs to be considering what type of water coverage they have,” said Wagler. “That’s part of what we do as brokers, provide advice – it’s not just about buying the coverage, it’s about understanding what you have, and what you may need and then when you need to use it.”

He also recommends taking a closer look at the fine print associated with flood risk coverage – sometimes it may not cover the full amount, or even come close.

“Before you automatically renew your policy, you should take a look at some of the detail,” said Wagler. “Because a lot of times, companies will put sub-limits down. You may think you have it, but some companies may limit you to $10,000 of coverage.

“If you have serious water damage in your basement, on average, it costs just over $40,000 to repair a basement. So $10,000 wouldn’t even really cover the cleanup – people need to pay attention to it.”

Basement flooding is a significant problem area in most incidents. There is a range of different flood insurance including overland water protection, which protects when water from rivers, streams or other bodies of water flows onto dry land. Other types of coverage offered are in the case of a burst pipe, groundwater coverage, or for a sewer backup. Certain insurance companies sell all kinds of coverage in one package.

When assessing flood risk, the insurance industry looks at several factors.

“Our industry looks at it on a couple of different levels; mainly they’ll look at mapping and the vicinity to a body of water,” said Wagler. “If you’re within 100 metres of a stream, or any kind of waterway, you’re likely to have difficulty buying a product.

“Prior loss history and vicinity to water is going to determine whether you can buy it or not.”

In the meantime, more needs to be done about the lack of flood risk information in the first place, said Henstra, adding that municipal, provincial and federal governments all have a shared responsibility to provide this information.

“Whether they choose to act on the information is different, but right now, it’s not even knowable,” said Henstra. “So it’s really kind of unfair to expect property owners to be buying insurance to protect themselves when they don’t even know if they’re at risk.”

The study found that other countries Austria, Belgium, Germany, France, the U.K., all have access to better quality flood-risk information. For example in the U.K., a homeowner can get a detailed flood risk report that includes details such as times of year to expect flooding, measures to prevent it, and the type of flooding you’re vulnerable to, just by typing in the users postal code.

“And really – it’s perplexing why we don’t have these maps. It’s not really an insurmountable challenge. In Canada, we’ve got the expertise, technology, data; it’s all there,” said Henstra. “I guess we just haven’t seen the leadership yet that’s required to get a new mapping effort off the ground.”

Misleading insurance myths about ‘severe weather’ flooding distract us from real problems

Opinion: Claims that rising frequency and intensity of storms is causing rise in payouts not based on science

Robert J. Muir

Flooding and the damage it can cause are of concern for good reason, and we all share the desire to mitigate the losses caused by flooding. However, the contention of Craig Stewart of the Insurance Bureau of Canada (IBC) in a recent op-ed in these pages, that increases in the frequency and intensity of severe weather are the cause of rising insurance claims, is iill-founded

First, the IBC has promoted its “Telling the Weather Story” report claiming that weather events that once occurred every 40 years now occur every six years in parts of the country, citing the source for that claim as Environment Canada data. This claim was based on nothing more than a hypothesized shift in a probability distribution, with no foundation in fact. Environment Canada corrected this IBC claim in Canadian Underwriter, and Canada’s largest insurers no longer repeated the IBC claim after they were made aware of the data.

IBC does not help its members by ignoring the real causes of flooding or hyping unfounded storm intensity and flood loss correlations at the expense of sound science and engineering

Second, the CBC Ombudsman concluded that CBC reports on the topic were incorrect in reporting insurance-industry claims that increases in the frequency and intensity of severe weather are the source of these rising insurance claims costs. In his op-ed, Mr. Stewart argued that the ombudsman used only one source to reach his conclusion. But that source, Environment Canada, compiles many other papers that have the same finding that there has been no change in severe weather events.

Furthermore, 10 studies in southern Ontario alone, by leading universities, municipalities and engineering consultants, have shown no change in storm design intensities that drive flood damages. When rainfall trends are extended to incorporate more recent data, including 2013 extremes, it is seen that there is no increasing trend in observed maximum rainfall amounts to support IBC’s repeated hypothesis that storms are on the rise.

The accompanying chart shows the trend from Toronto’s Pearson Airport meteorological station. Despite the 2013 extreme, the overall trend is still downward when recent data are considered.

The observance of correlation is too often used to declare causation, such as IBC claiming rain intensity as the cause of greater flood losses. While IBC may be confident in its loss numbers (even though 1990s values are not as robust as values compiled since 2008), it cites absolutely no rain data to correlate with those losses. Thus, IBC skipped right over correlation and claimed causation.

This is not science.

If losses have doubled since the 1990s, we must also look to the science of hydrology for an explanation. Unlike storm trends, urbanization and intensification have increased by significant factors for many decades and logically explain greater urban runoff and flood risk. We must accurately characterize the true causes of flooding to focus on the most effective solutions. If engineers ignore the facts and design flood mitigation infrastructure according to IBC’s falsely claimed frequency shift of 40 to six years, or the new unfounded claim that storms are more intense since 2009, scarce public resources would be diverted to over-designed, unnecessary works, delaying or even preventing implementation of reasonably sized infrastructure that is greatly needed.

Should governments focus on mitigation due to a “weather story” about bigger storms, they may do so at the expense of timely and effective adaptation strategies focused on the real problems.

IBC does not help its members by ignoring the real causes of flooding or hyping unfounded storm intensity and flood loss correlations at the expense of sound science and engineering.

Robert J. Muir, P. Eng is an Ontario municipal engineer and member of the Ontario Society of Professional Engineers

Insurance claim costs are rising because severe weather is making flooding worse

Craig Stewart

Opinion: IBC fully stands by our insured loss numbers and their attribution to escalating severe weather events driven by climate change

Since 2009, insurers have paid out an average of over $1 billion per year in claims, in contrast to the $400 million annually averaged through the 1990s. In 2018, insured losses from severe weather events across Canada totalled $1.9 billion, the fourth-highest amount of losses on record. Insured losses, on average, are caused by flooding more than any other single peril. Flooding can be caused by extreme rainfall, by rivers and lakes overflowing their banks due to sudden snowmelt and due to storm surges caused by coastal storms.

Terence Corcoran’s recent article discusses a complaint made by Rob Muir, a licensed professional engineer, which Muir lodged successfully with the Ombudsman for Radio Canada, Guy Gendron. Muir disputed comments by Blair Feltmate, Head of the Intact Centre on Climate Adaptation, who cited Insurance Bureau of Canada’s (IBC’s) contention that increases in the frequency and intensity of severe weather are the source of these rising insurance claims costs. Gendron, in reaching his findings relied on a single published source that studied historical incidences of severe rainfall between 1953 and 2012.

Gendron’s conclusions were erroneous for several reasons. First, the time series used by Gendron ends in 2012 while IBC’s numbers and Feltmate’s public comments primarily reference increases that started in 2009 and have risen through 2018.

Secondly, Gendron only references flooding that has arisen from extreme rainfall whereas insurance losses accrue from a range of different types of flooding events.

Finally, IBC’s numbers actually understate the growing risk, as the Canadian insurance industry did not start insuring the single greatest peril for residences — overland flooding — until late 2015. Those residential losses had been entirely borne by Canadian governments and homeowners until that date. Even without residential overland flood losses, insurers experienced escalating water claims from commercial policies, automobile policies and sewer back-up coverage.

Finally, our stated numbers only capture catastrophic events that total over $25 million and not the host of smaller events that occur regularly across Canada. Based on these errors IBC is requesting that the CBC review Gendron’s decision. IBC fully stands by our insured loss numbers and their attribution to escalating severe weather events driven by climate change.

The IBC-sponsored report, Combatting Canada’s Rising Floods Costs: Natural infrastructure is an underutilized option, was recently featured at a special event hosted by the Ontario Society of Professional Engineers (OSPE). It provides a framework for making decisions about the return on investment of green infrastructure deployed as a climate-adaptation measure. IBC, along with a number of OSPE members, spoke to ways in which both green and grey (or engineered) infrastructure are vital elements to a whole-of-society approach to climate change.

Fundamentally, we as a nation need to prepare for the impacts of severe weather. By focusing on adapting to climate change we can work together constructively to keep Canadians out of harm’s way.

Craig Stewart is vice-president of federal affairs at the Insurance Bureau of Canada.

Fifth anniversary of the June 2013 Alberta floods

Beginning on June 19, 2013 southern Alberta experienced extensive loss and damage from riverine flooding. More than 250 mm of rain fell over a 36 hour period in the foothills west and southwest of Calgary and began rapidly flowing east through the province’s river valleys bringing destruction across southern Alberta. This was the largest riverine flood damage event ever experienced in Canada, with insured damage exceeding $1.7 billion and total economic damage of approximately $6 billion.

Disaster mitigation and policy experts from the Institute for Catastrophic Loss Reduction (ICLR) are available to answer media inquiries concerning the floods. Noted ICLR experts below are available to answer questions relating to the impacts of the event (physical and financial), progress to date on various provincial flood mitigation efforts and whether Alberta is prepared for the next major deluge.

Paul Kovacs is founder and Executive Director of the Institute for Catastrophic Loss Reduction at Western University. He is Canada’s leading authority on insurance, natural hazards and climate change and has been a contributing author to numerous international and Canadian reports on reducing the risk of loss from flood, earthquakes, severe wind and wildfire. He has written more than 200 publications and articles and is a passionate champion for insurance, disaster resilience and adaptation to climate extremes.

Dan Sandink is Director of Research for ICLR. He has led a significant portion of the Institute’s urban flood risk reduction work, and has authored or co-authored dozens of reports and articles on topics related to urban flooding and natural hazards. His work has focused on public risk perceptions, adoption of lot-level practices, insurance, climate change adaptation, lot-level flood protection technologies, inflow/infiltration, construction codes, and mitigation of wildland-urban interface fire and high wind risk for low-rise residential buildings, among other topics.

Both Kovacs and Sandink are authors of the ICLR report Best practices for reducing the risk of future damage to homes from riverine and urban flooding: A report on recovery and rebuilding in southern Alberta, available at www.iclr.org

Glenn McGillivray is Managing Director of ICLR. As an insurance writer and commentator, his work has been widely disseminated across Canada. He has written more than 225 magazine and journal articles, publications and blogposts on a range of issues. He has appeared on CBC’s The National and The Exchange, CTV’s Your Morning and Power Play, CBC Radio’s The Current and CP24, as well as a number of other television and radio news and interview programs. Additionally, he speaks and lectures regularly on subjects related to the area of property and casualty insurance and reinsurance and natural hazards.

Sophie Guilbault is Manager, Partnership Development. She completed her Masters at Tulane University in Disaster Resilience Leadership Studies and holds a Master of Architecture degree from Laval University. At ICLR, Sophie is leading the Cities Adapt research program, ICLR’s Quick Response Grant Program and MEOPAR research on hurricane warnings in Atlantic Canada. Sophie can provide interviews in both English and French.

Established in 1998 by Canada’s property and casualty insurers, ICLR is an independent, not-for-profit research institute based in Toronto and at Western University in London, Canada. ICLR is a centre of excellence for disaster loss prevention research and education. ICLR’s research staff is internationally recognized for pioneering work in a number of fields including wind and seismic engineering, atmospheric sciences, water resources engineering and economics. Multi-disciplined research is a foundation for ICLR’s work to build communities more resilient to disasters.

SOURCE Institute for Catastrophic Loss Reduction

4 Ways To Prepare For Water-Related Damage

Source: IBC:

In today’s world of extreme weather events, $1 billion has become the new normal for yearly catastrophic losses – most of this is due to water-related damage.

Flooding and related sewer backup damage is costly for homeowners, businesses, municipalities and insurance companies. But, there are steps you can take to help mitigate risk.

From ensuring that important documents are not stored in your basement to installing a sump pump, there are many ways to be proactive such as:

  1. Keep a current and detailed home inventory.
  2. If your neighbourhood is prone to flooding, take precautions throughout your house and property.
  3. Assemble a disaster safety kit.
  4. Create a 72-hour emergency preparedness plan ​for your family.

Rest Easier. Know What’s Covered.

Talk to your insurance representative to make sure you have appropriate coverage. Be aware that:

  • ​Damage to your home caused by the sudden and accidental bursting of plumbing pipes and appliances is usually covered by all home insurance policies.
  • Historically in Canada, home insurance policies haven’t covered loss or damage caused by overland flood damage, which occurs when bodies of water, such as rivers, dams overflow onto dry land. This has begun to change. Some Canadian insurers have started to offer overland flood coverage for policyholders but this type of coverage is new on the market and not all insurers are offering it. Check with yours to see if it is available and if you qualify for the coverage because if you live in a known flood plain, the coverage may not be available.
  • Water damage in a basement that backs up through sewers, floor drains, toilets and showers maybe covered if your policy covers sewer back up or you may have purchased the coverage as an optional endorsement. So speak to your insurance representative to understand what coverage and limits you have.
  • Damage to homes caused by hail or wind is usually covered. This includes damage caused by flying debris or falling branches or trees, or damage caused by water entering through sudden openings caused by wind or hail.
  • If Comprehensive or All Perils coverage has been purchased on your auto policy, damage to vehicles from wind, hail or water is usually covered. This coverage is not mandatory, so check your policy.
  • In certain circumstances, homeowners who must leave their home due to insurable damage are usually entitled to additional living expenses (ALE) speak to your insurance representative to understand the coverage you purchased.

Tips For Starting The Claim Process

  • Call your insurance representative or company. Most insurers have a 24-hour claims service. Be as detailed as possible when providing information.
  • List all damaged or destroyed items. If possible, assemble proofs of purchase, photos, receipts and warranties. Take photos of damage incurred and keep damaged items, unless they pose a health hazard.
  • Keep all receipts related to cleanup and living expenses if you’ve been displaced. Ask your insurance representative about what expenses you may be entitled to and for what period of time.

Insurance bureau has advice for residents who blame wind for flood damage

Industry group says adjusters evaluate ‘circumstances of the entire event’

Jordan Gill · CBC News

Private insurance companies in New Brunswick are urging people who suffered property damage during spring flooding to contact their agents directly to discuss their individual policies and whether wind damage is covered.

This comes after retired insurance agent Mac Burns launched a campaign to help people who have had their claims turned down because they don’t have flood coverage, even though in many cases the damage didn’t happen until powerful winds came up the first weekend in May.

Burns said that since the “But For The Wind” campaign began, he has been contacted by 23 people whose claims have been denied by insurance companies.

Erin Norwood, the Atlantic manager of government relations for the Insurance Bureau of Canada, said people may not have “correct information.”

“When a claim is presented for loss or damage … the circumstances of the entire event are analyzed against the coverage terms and conditions,” she said.

Insurance ombudsman can help

Richard and Judy Ingram say their insurance adjuster attributes the damage in their cottage to the flood, although wind was the prime culprit. (CBC)

Richard and Judy Ingram said their insurance adjuster told them the damage to their cottage likely wouldn’t be covered because they didn’t have flood insurance.

But the Ingrams say the damage was actually caused by the wind, which their policy does cover.

Norwood said all factors that contributed to the damage will be taken into consideration by insurance companies.

Some retired insurance agents have banded together to form a task force to help get information to people who suffered wind damage on May 5 during the spring flood. The Insurance Bureau of Canada’s Erin Norwood is the Atlantic Manager of Government Relations, she says every policy is different and people need to check with their broker to get the correct information. 11:46

“Loss or damage from a single occurrence with multiple causes, such as this case, are adjusted and settled as one event. A policyholder doesn’t need to submit a water claim and then a distinct wind claim for the same occurrence.”

Norwood said if cottage owners have a complaint about an insurance adjuster’s findings, each company has an in-house ombudsman who can help.

“It is available, it’s there to be used, and if you do have concerns that’s where you should be sending them,” she said.

Urged to call insurance agents

Norwood said the best people to answer questions about a cottage owner’s insurance policy are at the company that provided the insurance since there’s no standard in the industry as to what’s covered.

“Every policy is worded differently, ” she said.

“The insurance industry is a very competitive market, so products offered by companies differ to meet different consumer … needs.”

Norwood said the Insurance Bureau of Canada also has staff who can answer questions.

Just as cottage owners have been denied help under their insurance policies, they have received only limited assistance from the province.

Cottage owners can apply for flood recovery assistance up to $6,100, but only for cleaning up debris outside their cottages, not for cleaning anything touched by floodwaters inside their cottages.

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