Will Home Insurance Cover Flood or Earthquakes?

It’s pretty standard: you buy home insurance to protect your home against an array of different common perils, generally including such events as fire, storms, hail, falling objects, theft, vandalism, and so forth. But it’s a misconception to assume you’re covered for everything, and that especially includes specific perils such as earthquakes or flooding.

Unfortunately, due to climate change, rates of massive weather events causing severe property damage to have been on the rise. Statistically, losses are costing more and more money, oftentimes meaning higher insurance payouts. Among these weather events are earthquakes and flooding, and as the effects of climate change shift and develop, we’ll likely see a lot more of these. But if you haven’t purchased additional earthquake or flooding insurance, you won’t be covered for these perils.

Most homeowners aren’t aware that both flooding and earthquake insurance are not automatically included in their policies.

Most Canadians assume they’re insured against earthquake and flooding-related losses. After all, these are unexpected events (for the most part) and they cause some pretty severe damages – why wouldn’t they be covered?

Well, because of the nature of how expensive these claims can be. In flooding or earthquake-prone areas, you might not even be able to purchase insurance at all to protect yourself against these perils. Unfortunately, with more water damage on the rise due to climate change, we’re starting to see homes swept away, floors flooded, etc. With earthquakes, the damages can range from minimal to total property destruction, and some areas of Ontario (while not common) could be seeing some costlier damages due to earthquakes. Some of these homeowners suffering damages due to these earthquakes and floods have wrongly assumed they’d be covered.

There’s power in being informed. Bottom line: if you do not fully understand what you’re covered for, then odds are that you need to check in with your broker. Always do this before making any grand assumptions about what you’re insured for. You could end up with a nasty surprise if you make assumptions and then it turns out you don’t have coverage – and now you’re looking at tens of thousands of dollars’ worth of repairs.

What does a base home insurance policy cover?

Your standard home insurance policy will vary in what it covers, and that comes down to a lot of things – but most importantly, what insurer you’re with. A base policy may cover standard perils, such as damages due to wind, ice, and fire. However, damages due to sewer backup, overland flooding, and earthquakes may require an insurance add-on to have coverage for.

It’s important to note that if these perils are something you’re worried about or could cost you a lot in damages, you should purchase the added coverage to accommodate your potential risk in the event of natural disasters and flooding. This is becoming a more commonplace purchase due to the severity of these things.

The risk of flooding is increasing with every year

Climate change has really changed the way insurance works. The Insurance Bureau of Canada has even estimated that roughly 10% of private residences in all of Canada are at higher risk of flooding. As an added surprise, overland flood insurance only became a thing after the major flood in Alberta in 2013.

ICBC estimated that the total insured cost of property damage due to extreme weather in Canada in 2021 was about $2.1 billion. As flooding concerns increase, the IBC suggests that residents prepare for floods – part of which includes getting the right insurance coverage.

You may also want to prepare your home for flooding in other ways, because there’s more than just a risk of property damage – there’s a risk of the loss of life. Here’s some tips:

• Prepare a home emergency kit to keep with you in case of flooding. Make sure it includes a first-aid kit, extra clothes, blankets, non-perishable food and water bottles, flashlights, etc.
• Remove your valuable items from the lowest floor of your house or wrap them in water-proof bags or containers.
• Shut off the electricity to areas of your home that are more susceptible to flooding if heavy rainfall is inevitable.
• Create an emergency preparedness plan for members of your household so everyone knows what to do if a flood does occur.
• Avoid coming into contact with flood water, as it could potentially be contaminated.

It’s best not to be caught off-guard. The risk of flooding is very real, and Ontario isn’t immune to this risk. All in all, having a plan in place in case the worst happens is best. That plan should also include the right insurance coverage.

Get the right coverage with Excalibur

Insurance is something of a guessing game in and of itself, but for the insurance experts, it’s all a careful science. It comes down to risk and likelihood. If you want insights on getting the right insurance to protect against flooding and earthquakes, or whether you need these coverages, chat with an Excalibur Defender. We know about your potential risks and want to give you the advice you deserve.

Excalibur not only gets you the best coverage and advises you on what to choose, but with our Rate Reducer, we can get you the best possible rates. Now, you don’t have to worry about the potential costs of flooding – and you’ll save on your insurance. Working with us is a win-win.