Flash flooding that struck Montreal and Edmonton within days of each other has put Canada's widening flood insurance gap back in focus, as new data shows water damage claims nearly doubling at some carriers while the federal government's promised national flood insurance programme remains undelivered.
According to a report from Global News, up to 150 millimetres of rain fell on parts of Montreal's West Island and South Shore on Saturday, flooding hundreds of homes in Pierrefonds-Roxboro and Dollard-des-Ormeaux and cutting power to more than 20,000 households.
In Alberta, the Edmonton region recorded its second-wettest June on record to that point, with nearly 190 millimetres falling in the month according to Environment Canada, pushing stormwater systems to capacity and prompting a state of emergency that was lifted on Monday.
The back-to-back events arrive against a deteriorating loss backdrop. Statistics Canada data showed the years 2020 to 2025 ranked among the top 10 most costly years for catastrophic event claims in Canadian history, with 2024 alone producing $8.6 billion in insured losses. Flooding in Quebec and Ontario accounted for roughly $3.7 billion of those 2024 claims.
The structural pressure on carriers was visible before this weekend's events. Allstate Insurance Company of Canada reported in February 2026 that home insurance claims caused by external water sources, including heavy rain, overland flooding and sewer backup, increased 94% in 2025 compared to the previous year, with external water damage accounting for nearly a quarter of all home insurance claims in 2025. Looking across the prior five years, water damage represented more than 40% of all home insurance claims between 2021 and 2025, with external water sources responsible for nearly one-third of all water-related claims during that period.
Home insurance premiums have followed. Premiums across Canada have risen as much as 45% over the past six years, driven by extreme weather including wildfires and flooding, according to David Mayer, director of insurance and underwriting at rates.ca. Mayer described the trend as a structural issue that premium increases have not fully kept pace with, depending on the coverage homeowners carry.
The core insurance problem the weekend events illustrate is not new but remains largely unresolved. Standard home insurance policies in Canada do not cover overland flooding or sewer backup, both of which are among the most common mechanisms by which water enters homes during flash flooding events. Both must be purchased as optional endorsements at additional cost.
Rob de Pruis, national director of consumer and industry relations at the Insurance Bureau of Canada, said homeowners need to verify their coverage before events occur. "Standard home insurance does not automatically include overland flood or sewer backup coverage. These coverages are optional and have to be added on at an additional cost to your standard home insurance," he said. "You want to reach out to your insurance provider to make sure that you do have that coverage because that can literally help and save you thousands of dollars in the future if you do experience that damage."
Coverage availability is also uneven. The IBC estimates that approximately 1.5 million high-risk Canadian households cannot obtain affordable flood insurance, with 10% of households in Canada at high risk of flooding but lacking access to flood coverage. In areas insurers classify as high-risk, including communities with recurring flood histories, overland water coverage may be capped, subject to steep deductibles or unavailable entirely.
The structural solution the industry has been seeking remains stalled. Canada still lacks a functioning national flood insurance backstop, despite the federal government committing to the programme in Budgets 2023 and 2024. Budget 2025 included broader climate resilience funding but contained no updates on the national flood insurance programme, with discussions between Public Safety Canada, the IBC and industry partners ongoing and no confirmed launch timeline as of 2026.
The IBC has proposed a federal reinsurance entity through a Canada Mortgage and Housing Corporation subsidiary, designed to extend affordable overland flood coverage to the approximately 1.5 million Canadian households currently at highest risk. Until that programme is operational, the cost of water-related risk continues to sit with private insurers and their policyholders.
The Liberal Party pledged $450 million over five years for the programme during the April 2025 election campaign, targeting an April 2026 launch, but Public Safety Canada has not confirmed that timeline has been met.
