What is overland water insurance?
Overland flooding is when water overflows from a lake, river, or body of fresh water and causes destruction to homes, vehicles, and other property. It’s usually caused by extreme storms, heavy rainfall in short periods, and rapidly melting snow. Water damage from these events is typically not included in basic policies.
Insurers offer overland flood insurance or overland water coverage as an add-on. If you live in a region prone to overland flooding from lakes and rivers, along flood plains, or low areas, it's recommended that you invest in it.
Overland floods and coastal floods are not the same. Floods from coastal waters, storm surges, saltwater and tidal waves are not covered as part of overland flood insurance. You would need coastal flood or tsunami insurance in this situation.
Overland flood insurance should not be confused with other types of water coverage such as sewer backup insurance, flooding from neighbours, and accidents due to a broken pipe or plumbing issues. These are typically covered under water damage insurance.
Does my home insurance policy cover overland flooding?
Many homeowners are surprised to discover that overland flooding and many types of water damage are not included in home insurance in Canada. If you have coverage, it’s limited and can vary based on your insurance company and policy level of protection.
In 2021, a CBC report found up to 10% of homes could be uninsured due to incomplete floodplain maps and the industry pulling back on overland flooding areas. Never make assumptions about what is included in your plan. If you are not sure, speak with your insurer.
How does overland water coverage work?
Overland water coverage is offered as an endorsement. It’s not automatically included. But insurers commonly recommend this type of protection. Adding this to your policy will increase your premiums.
When your policy has this endorsement, you’ll be covered for any loss or damage to your belongings and property from overland flooding. This is another reason why it’s essential to keep a home inventory checklist for insurance. It’ll just make it easier to manage the claims process.
If you rent, it’s highly recommended to add additional flood insurance to your policy.
What is an example of overland flood insurance?
You’re on your way home from work in the city, and it begins to rain heavily. You begin to hear reports of road closures and flooding around roads in your neighbourhood. You live close to a nearby creek – which has already started to overflow. The increase in water causes flooding in all the homes in your neighbourhood. After the storm, you find you have extensive damage to your basement, and your home is uninhabitable.
While restoration work is being done, you need a hotel and have your living expenses covered. In total, it will cost $25,000 to get your basement back to its pre-storm condition. Since you have overland flood insurance, your living costs and repairs will be covered.
Without overland flood insurance, you may have some protection, but not enough to cover all the costs to repair your home.