Insurers are confusing clients with overland flood insurance differences

Published: April 23, 2019



While overland flood insurance is now widely available in Canada, carriers are taking an inconsistent approach to their coverage solutions. Recent spring thaw floods in Quebec and New Brunswick have once again highlighted the disparity in coverage options across insurance companies.

Many have celebrated the introduction of overland flood insurance, which arrived in Canada during 2015. However, brokers report carriers are not unified in the type of coverage they offer. Speaking to B.C. Broker magazine and specifically discussing the floods in Grand Forks, British Columbia in May 2018, Sam Cowan of RHC Insurance Brokers said:

“Nobody has the same coverage, some have limitations, and one company denied everything because there is a new sewer backup clause – half the problem was flood and half of the problem was sewer backup,” said Cowan, vice president of sales and marketing, and a partner with RHC Insurance Brokers in Grand Forks, as saying.

Taking the Grand Forks floods as an example, Cowan said sewer backup caused the majority of damage. One customer had insurance for sewer backup but not for overland flooding. “He was denied for a sewer backup claim because he was told that the water is coming from an overland flood,” Cowan says. “But he had two tenants in the same building who had sewer backup coverage afforded by two different insurance companies.”

Yesterday, we reported on the spring floods currently affecting New Brunswick. Similar insurance problems are arising in the province.

“In most instances, we are now seeing a denial of coverage under sewer backup when the source was determined to be overland flood and cover was not purchased,” said Andrew Campbell, office manager at Hall & Fairweather Insurance in Saint John in an interview with Canadian Underwriter.

Campbell points out insurance carriers would previously be more versatile in what they would pay out on. Now overland flood protection is around, they are denying certain claims. “This is confusing for clients, especially if they had a previous claim paid under [sewer backup] and are now denied coverage for the same loss because they do not have overland water coverage.”