One of the hardest things Alberta brokers will have to do following a record-setting flood is handling the reaction of policyholders when they find out insurance coverage for overland flood is not available, say Manitoba brokers who are well-versed in flooding disasters.
Five major storms in in Manitoba caused extreme flooding in most watersheds, rivers and lakes in 2010-11, and the Assiniboine River experienced a 1-in-350-year flood. Sixty-four municipalities declared states of local emergency, and a report to the Province of Manitoba estimated damages to be $1.2 billion.
Calgary is facing similar catastrophic flood damage as the city starts to clean up from a flood that swept through the city’s downtown core and areas outside of the city. The province’s premier says the reconstruction effort could take up to 10 years, and plans to balance the province’s budget have been scuttled to pay for flood damage.
“Oh yeah, we’re watching that,” Manitoba broker Randy Thiesen said of what’s happening in to brokers in Alberta. “It’s not easy to watch. They are going to be busy for awhile.”
Alberta brokers can expect to confront a lot of shocked or angry clients, Manitoba brokers say.
“A lot of people [in Manitoba], consumers, thought flood coverage was automatically covered in their house insurance, but it’s not,” said Thiesen, who works in the Brandon, Manitoba office of Ficek Insurance Agency Ltd. “That took a lot of people aback. (continued.)
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“We had to be quite patient and explain that basically few companies will insure it, but not that many. Once you explain how much the premium is, [clients] are more understanding. But they’re still not happy because it’s quite a shock that they are going through.”
Insurance coverage for flood waters seeping into homes and businesses from the exterior of the building is not available in Canada under standard home and business policies. Overland flood coverage is available if homeowners or business owners wish to purchase an extension to their policies, although Manitoba brokers say many consumers will balk when they find out the additional premium costs to purchase it.
Flood insurance is available for flooding that originates inside the home or business, most commonly in the form of sewer backup.
“We usually sell the sewer backup coverage – it’s big in Manitoba,” said one Winnipeg broker who identified herself only as Kim. “That’s dirty water coming up from your sewer drains.
“At that point, we advise them that there is no flood coverage for overland flooding. Sometimes you do have the overland flooding, and it also causes the sewer to back up. In that event, they do have coverage for that.”
Manitoba brokers say the number of flooding events in the province has provided ample opportunity to explain to clients the lack of coverage for overland flood. As a result, clients are less likely to call their brokerage offices to clarify coverage after a flooding event, since they already know they aren’t covered.
Still, Manitoba clients have made insurance claims knowing they are not covered. Government assistant programs in the past have required claimants to demonstrate that insurance will not cover their claims.
