Canadian brokers face a flood of water claims

Insurers and brokers report seeing an escalating number of water damage claims over the past two years. And the severity of claims is on the increase thanks to this common culprit…

Canada’s second-largest insurance company has reported that water damage claims make up nearly 40% of all homeowner claims, and the average cost of a water damage claim has almost doubled over 10 years.

Brokers confirm they have seen the same claims patterns in their offices, particularly the increased severity of water damage claims costs.
 
“We have seen an increase in water claims, probably in the last two years, I would say,” said Bennett McBride of Sound Insurance Services in Ontario. “Maybe the severity of the claims has changed, because instead of dealing with a basic basement, now you are dealing with man-caves and people have $100,000 down there.”
 
Finished basements are a prime reason for escalating water damage costs, said Wayne Ross, vice president of property claims for Aviva Canada. (continued.) 

#pb#

 
“With so many Canadians making a significant investment in their basements as more of a comfortable living space than a grungy storage room, a greater value in belongings in a high-risk area of the home has led to an increase in number of water damage claims.” 
 
Data from Aviva Canada show that the average cost of its water damage claims rose 117% -- from $7,192 in 2002 to more than $15,500 in 2012.
 
Four regions showing the greatest increases in water damage claims costs included B.C. (154%), Ontario (136%), Alberta (109%) and Newfoundland and Labrador (107%). Last year’s spring thaw was “uneventful,’ said Aviva. Nonetheless, the insurer paid out more than $111 million in property water damage claims.
 
There is a great deal of discussion within the property and casualty industry about whether increased water claims are a by-product of climate change, or whether they are the result of human error – or both. 
 
McBride said many water damage claims at his brokerage fall under the “human error” category, as opposed to being related to renovation. “Many of ours are just people forgetting to turn their water valves off during the winter, for example,” he said. “It could be a hose outside and they don’t drain the water.”
 
To help their clients avoid water damage, brokers are advising their clients to:
 
Make sure roofs are in good condition.
Unclog blocked gutters
Clear out snow accumulation near foundations, doors and basement windows
Unblock catch basins
Move valuable basement items to high shelves or risers 
Seal exterior walls when finishing the basement.
Install sump pumps and backwater valves.
 
McBride said advice to clients facing water-related damage may depend on the circumstances and severity of the damage. “We try to get them not to use insurance as much as possible, but if it makes economic sense for them to put a claim forward, then of course we suggest that,” he said.

Keep up with the latest news and events

Join our mailing list, it’s free!