Homeowner's Insurance - Water Intrusion

[ken0042]

I think that's my point though. My house is over 4km from the river and at least 50 feet higher than it. If insurance covered flood damage and based premiums upon risk factors, my flood premiums should be a lot less than Norm's relative.

[Slava]

Sure, but many people won't buy the coverage, because they won't flood. My house is nowhere near the river, so the coverage would be virtually useless. The only people who would buy are those in proximity, and at that point the coverage would cost too much to make it reasonable anyway. Then you have people who live in areas that flood consistently... which isn't really the point of insurance. The most basic premise of insurance is to spread the losses of the few amongst the many. When the only people buying a product are those who suffer a loss though, it becomes uneconomical to offer.

I just generally think flood coverage in Alberta would be hard to add to the standard homeowners policy. I know that the argument could be that we have it for business, and while that is true there are many differences. Let's take the Saddledome as an example. They have a premium which is based on the likelihood of a flood, but the deductible could well be a percentage of the loss. Most homeowners contracts do not operate in that way. Instead a homeowners policy has a set deductible in the event of a loss. Its my opinion that this is better for the individual because you have cost certainty in the event of a catastrophic loss. The policy for a commercial enterprise, in this case the saddledome, might not have that certainty at all. Instead, depending on the damages and costs for replacement/repairs, etc. their share of payment changes.

[GGG]

I think flooding is one of the things that you accept as a community. Especially large scale damage like this. Its not really insurable because it is a known quantity. We effectively know that this event will occur again in the next 100 years and we know that floods causing significant damage will occur in the next 20 to 30 years. So if this is known we have a few options.

Have those who choose to live in the 100 year flood fringe pay an additional tax into a fund to cover flood based losses, cover it as a city / province / country, or invest over the next 20 years on technology to prevent flooding.

[chemgear]

http://www.theglobeandmail.com/news/...ticle12818084/


Indeed, Feltmate said insurance companies are now losing money on water damage insurance — even though it covers only water that backs up into basements. And they’re under mounting pressure to expand coverage to include the even more costly damage caused by “overland flooding” as well.

While most Canadians believe they’re insured for flood damage, in reality Feltmate said Canada is the only G8 country in which property insurance does not include damage caused when water pours in through windows and doors — as was largely the case in southern Alberta over the past week.

Insurance companies are between a rock and a hard place. The potential cost of overland flood insurance is enormous but, at the same time, Feltmate said companies are aware there are repercussions for the industry’s already dismal image in continuing to allow victims of devastating floods to “go apoplectic” when they discover they’re not covered.

Moreover, if the industry doesn’t deal with the issue itself, he said the government could impose a solution that is less palatable.

Immigration Minister Jason Kenney, the minister responsible for southern Alberta, strongly encouraged insurance companies on Monday to pay the claims of people whose homes were damaged by both backed up water and overland flooding, without being overly nit-picky about the exact cause of the damage.

“We’re talking about large sectors of Canada that could be potentially uninsurable,” Feltmate said. “So we’re talking millions (of Canadians effected), we’re not talking 10,000 people in a city somewhere.”