Storm flooding spurs creation of overland water insurance

Extensive weather-related storm damage across Canada has prompted one insurance company to start offering a new product called "Overland Water Coverage" for an additional annual premium ranging from approximately $60 to more than $500 depending on a home's value and its location.

"So whether it's runoff from your snowbanks in the backyard — and we had lots of that, last winter — or whether it's torrential rains, a rainfall event, where water's getting into your house that normally doesn't get in, we created the coverage to respond to that," says Aviva's Atlantic Canada vice-president Gordon Murray.

Aviva partnered with experts in flooding to map every province into 15 risk zones.

That information is not provided online but can be requested from a broker.

Murray says more than 90 per cent of the homes in New Brunswick would fall into zones considered low to medium risk. Approximately three per cent of the homes would be excluded from coverage.

"If you look around at the areas that are generally underwater in the spring, [those] would be the areas that would have difficult getting coverage," says Murray.

According to the policy language, home owners would be covered for damage caused by rapid accumulation or run-off of surface water from any source including torrential rainfall.

That includes direct physical loss or damage resulting from the accidental entrance of water through foundations, basement walls or basement floors.

Normally, water damage is only covered when sewage drains back up, or when water pipes burst, or when water enters a home through accidental damage, such as a tree breaking a window.

New Brunswick's consumer advocate for insurance says the overland water option is a welcome change.

"We've been asking for this for a number of years for the insurance industry," says Ronald Godin. "And I'm happy to see that it's now available."

]Home insurance costs have jumped 36 per cent in New Brunswick over the past three years, according to Statistics Canada's consumer price index.

House insurance, unlike car insurance, is not regulated by the province and companies are free to charge rates they see fit.

Aviva says the new policy offers the broadest range of protection in the marketplace today for regular insurance policy holders.

But Godin predicts more competition will follow.

"If one company has brought it out, I'm sure the others will, especially the major players in the industry," says Godin.

"They want to be competitive. They want to offer their customers, the same protection, or more. So I'm sure this is going to be a trend across the industry."

Godin says the policy could be very valuable and advises consumers to speak to their insurance broker about the costs and coverage associated with the policy.