With federal and provincial governments both attempting to offload the cost of flooding to homeowners, experts say that they are not doing enough to help Canadians purchase private insurance coverage of their own.
The federal government hands out about $1 billion a year to provinces and territories that are responding to and recovering from natural disasters – flooding accounts for 75% of those costs, the University of Waterloo said in a report.
“Because private flood insurance is becoming ‘readily and reasonably available,’ some provincial governments (e.g. British Columbia) are notifying residents that flood damage no longer qualifies for disaster assistance,” the report read.
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As a result, the federal government has been trying to pass some of the costs on to provinces by raising thresholds for federal disaster assistance. Both Federal and provincial governments are also trying to reduce flood-related cash outflows by encouraging homeowners to get flood insurance.
While some private insurers have been offering overland flood insurance since 2013, not many homeowners were aware that such coverage existed.
University of Waterloo professor of environment and business Jason Thistlethwaite believes the authorities have not done enough to spread awareness about the risk of floods and the need to purchase insurance.
A survey by the university found that among 2,300 Canadian respondents living in areas designated by the federal government as having a high risk of flooding, 74% of said that they did not believe they were vulnerable to such risk.
Thistlethwaite told Globalnews.ca that in comparison, the UK government has a website that allows citizens to input their postal code and easily find out if their neighborhood is in an area of high flooding risk. He also added that in the report, only a quarter of Canadians polled said their insurers had contacted them about flood insurance options.
Another issue related to flooding risk is that homeowners who live in flood-prone areas typically have difficulty securing insurance.
Marie Thomas of insurance comparison site InsuranceHotline.com pointed out that unlike auto insurance – wherein even drivers with poor records can still be assured of insurance through Facility Association – home insurance does not have an equivalent non-profit insurance system in place.
Thomas also noted that even when flooding insurance is available it might cover only a fraction of the costs. High-risk homeowners who manage to purchase insurance might find that their coverage maxes out at only $20,000 or even $10,000.
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