Weather events not covered by most home insurance policies in Canada

Weather Events Not Covered by Most Home Insurance Policies in Canada

Posted by on Mar 16, 2022 in General Category

Natural disasters and extreme weather events are becoming increasingly common due to the ever-changing climate. From ice storms in February to wildfires in the summer, these unexpected events can be financially devastating for your home and your family, especially if your home insurance policy does not have the natural disaster coverage you need. Unfortunately, much like the home buying process, finding the right home insurance can be confusing for yourself and your family. Each provider and policy provides different coverage options. That’s why it’s essential to be aware of precisely what your home insurance plan entails and if it has the protection you need for total peace of mind. Most standard home insurance policies cover unexpected weather events, such as fires, lightning, hail, windstorms, hurricanes, and tornadoes. But damages due to floods and earthquakes are not usually covered and must be purchased as add-ons to your policy. So, what exactly do these add-on insurance policies cover? Let’s dive a little deeper.

Earthquake Insurance

In general, home insurance policies from most insurance providers do not include coverage for damages caused by earthquakes. However, it may be purchased as an optional add-on.

What Is and Is Not Covered by Earthquake Insurance?

If you’re a homeowner, your earthquake insurance should cover the loss or damage of the building and any personal properties due to tremors or shakes from an earthquake. It should also include the cost of living if you cannot remain home during necessary repairs. However, depending on your policy, it may not include loss or damage caused indirectly by the earthquake, for example, loss in land value, or damages from landslides, snowslides, tsunamis, or floods of any nature.

What is the cost of Earthquake Insurance?

Earthquake insurance is available to all Canadians, but homeowners in regions at greater risk may be more inclined to purchase earthquake insurance. Higher risk regions in the country include western British Columbia, St. Lawrence and Ottawa River valleys, and parts of northern territories. The varying risk of an earthquake is a significant factor for earthquake insurance costs. Other calculating factors include:
  • The construction and age of your home
  • The value of your home and its contents
  • The estimated coverage limit you require
  • Your deductible

Is Earthquake Insurance worth it?

Ultimately, your decision to get earthquake insurance depends on your risk tolerance. While the premium and deductible for this type of coverage can be high, it may be a good investment if you live in a high-risk area. It is also important to note that not every insurance company offers earthquake insurance due to its risks and high potential payout. If you are looking for the right earthquake insurance policy for your specific needs, our knowledgeable insurance brokers at Oegema Nicholson are here to help.

Flood Insurance

While instances of floods are not new to Canada, flood insurance was only introduced in 2015. The Government of Canada reports that floods are the most significant natural hazard. There are many ways flooding can happen, including:
  • Overland flooding- when rivers or lakes overflow due to rainfall or melting snow and ice.
  • Rain-related flooding- due to heavy or ongoing rainfall without proper ground drainage.
  • Flash floods- due to hurricanes or storms.

What is and is not covered by Flood Insurance?

In the insurance context, the term “flood” is not a catch-all term for all water damage in a home. Most typical home insurance policies cover accidental water damages from sources inside the house, such as faulty plumbing or burst pipes. But, if you are looking for protection from water damages due to outside sources, such as overland flooding, you will need to add flood insurance to your existing policy at an extra cost. Flood insurance usually does not cover damage from flooding due to saltwater, tsunamis, tidal waves, or sewer backups. Read through your policy or ask your insurance broker to understand exactly what type of water damage is covered.

What is the cost of Flood Insurance?

Compared to other kinds of insurance, the cost of flood insurance can vary significantly among different insurance providers. Your premium for this protection depends on several factors. This includes:
  • The location of the home and the level of flood risk in the area
  • The construction and age of the home
  • Your coverage limit
  • Your deductible
You’ll find that the deductible for flood insurance is generally higher than other add-on policies. It usually ranges between $500 and $10,000.

Is Flood Insurance worth it?

If you live in an area prone to floods, such as Ontario, Quebec, and Manitoba, flood insurance may be a good investment. Without the proper insurance protecting you and your property, you will be responsible for the costs of repairing or even rebuilding your home.

Am I eligible for Flood Insurance?

Most Canadian homeowners are eligible for flooding insurance. However, if you live in an area with an extreme flood risk, which usually accounts for about 5% of households, you may not be eligible for this type of coverage. When searching for the right flood insurance policy, shop around as every insurance company’s perspective of flood risk is different. We recommend working with an experienced insurance broker to help you determine your eligibility.

Note on Disaster Assistance Programs

In a disaster, federal, provincial and territorial government programs may provide financial help to affected communities. However, if an earthquake or flood insurance is available in your area, but you decide not to purchase it, you may not be eligible for government financial assistance. Finding the right home insurance policy can be intimidating for any individual. At Oegema Nicholson, our experienced insurance brokers understand every homeowner’s unique needs. That’s why we allow our clients to pick and choose the coverage they need so that they are never under-insured. For more information about home insurance in Ottawa, call us at 613-704-7766 or contact us here.

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