WHAT IS OVERLAND WATER COVERAGE?

What is overland water coverage? Most Canadians are not super familiar with this type of insurance and for good reason. Overland water coverage is a relatively new product in the Canadian insurance market, having not existed prior to 2013.

That year saw historic (and historically destructive floods) hit both Alberta and Toronto. In Alberta, the flood led to five deaths and displaced more than 100,000 people. Estimates have put the cost of the flood and its impacts at over $5 billion. 

Flooding in Toronto, while not nearly as destructive, still knocked out power for 300,000 people. It also caused nearly $1 billion in damage. In the wake of these two natural disasters, insurers decided that they needed to do more to make flood coverage accessible to their customers, and overland water coverage was born. 

Property owners are not required to purchase overland water coverage — though landlords are free to require their tenants to carry overland coverage as a condition of renting. However, property owners in higher–risk areas may choose to add optional overland coverage to their home insurance as a way to protect themselves from the potential of another historic flash flood disaster. Were a flood on the level of the 2013 Alberta or Toronto incidents to occur again, overland water insurance would give property owners more comprehensive protection for flood damage. 

The creation and popularization of overland insurance policies is not the first time that Canadian property owners have had access to flood coverage. On the contrary, basic flood coverage is part of most home insurance policies. What many people did not realize before 2013, though, was that the flooding coverage on their homeowner’s policy mostly involved damage caused by in-home water sources.

For instance, if a pipe were to burst, if a bathtub were to overflow, or if a hot water tank were to burst, any damage caused by those events would be covered. Water damage linked to leaking roofs or swimming pools would also be part of a basic homeowner’s policy.  

Overland water coverage is different. It refers to freshwater floods, including those caused by heavy rain and overflowing rivers, lakes, or streams. In the past, if this water were to breach your home’s ground-level windows, doors, garage doors, etc. your home insurance policy would not cover any of the resulting damage. 

This type of overland water damage can occur due to heavy rain (as in the 2013 Alberta and Toronto natural disasters) but can also be due to factors such as spring run-off from melting snow and ice, failed dam systems and more. An overland water policy includes coverage for all these types of damage. 

Overland water policies have become much more common over the past five years or so, with many property owners seeking to protect themselves and their homes against the possibility of sudden and unexpected flooding. However, it is important to understand that not all property owners will automatically be eligible to add an overland policy to their home insurance. Homes situated within particularly high-risk ‘flood zone‘ spots are difficult to insure in this way, simply because the risk level is too high for insurers to shoulder.

Homes that fit this description include those that are close to rivers, streams or other bodies of water or homes on low ground — especially those with downward-sloping driveways. Alternatively, your insurance company may offer the coverage to you, but bill you a higher rate than you would pay if your home were in a lower-risk area. 

As you can see, overland water coverage is not a comprehensive form of water coverage. Nor is the flooding coverage included in your standard home insurance policy. In truth, the best protection against flooding is to combine multiple policy types into a more nuanced, all-encompassing insurance strategy. For instance, overland coverage and sewer backup coverage go together, as one of the significant risks of overland flooding is sewer or septic system overflow and backup.

If a sewer backup occurs because of overland water and damages your home, your standard overland policy will not cover damage caused by the sewer backup itself. As such, it is wise (and often required) to buy both overland and sewer backup coverage together.  

There are also other types of flood coverage you can purchase to protect your home more thoroughly. Groundwater coverage, for instance, can cover situations where rainwater saturates the ground and causes the water table to rise, thus leading to more indirect damage to your home. Examples might include groundwater entering through a crack in the foundation and damaging your basement, or even a septic tank problem caused by the elevated water table. 

Some types of water damage, unfortunately, are never covered by insurance policies. These include “act of God“ events, such as tsunamis or coastal flooding, as well as avoidable roof leaks or water damage that occurs because a window was left open. Making sure your home is closed up and secure during rainstorms or snowstorms and repairing or replacing your roof when maintenance is due, are steps you can take to protect your home from some of these uncovered risks. 

Are you interested in learning more about overland water coverage or other types of insurance that you can use to protect your home against flood risks? If so, our team at Guild/HMS is ready to help. With climate change driving more extreme fluctuations in weather patterns — and thus leading to bigger storms with historically heavy rains — our insurance companies have taken steps to make sure that our customers have access to the coverage they need to keep their homes, their belongings, and their families, safe.

Click Contact Me, and we will connect you with one of our insurance brokers for advice on overland flood coverage.