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A New Way to Protect Your Home from Water Damage

By AMA Staff

In recent years, Canadians have been hit by a repeated cycle of severe weather that has wreaked havoc on homes and lives. “Catastrophic losses”—insurance industry lingo for insured losses from a natural disaster totalling more than $25 million—are on the rise. And the costliest events are happening in Alberta.

Though the $3.58-billion insurance bill from last year’s Fort McMurray fire was by far the largest in Canada’s history, water damage is actually the number one peril nationwide. According to the Institute of Catastrophic Loss Reduction, water damage now accounts for 50 percent of all claims. Even last year, though the Fort McMurray wildfires dominated the news, floods still hit Grande Prairie, Westlock and other Alberta towns.

“In most communities, the chances of loss due to a storm are greater than loss from a catastrophic fire,” says Karen McDougall of AMA Insurance. “Plus, it can be just as disruptive to fix your home due to damage after a storm.”

The numbers in Alberta are staggering: In 2013, insurance companies paid out almost $2 billion due to the Southern Alberta floods. A year later, floodwaters again slammed that part of the province, resulting in $568 million in insured losses. Factor in an aging storm sewer system and often over-burdened water infrastructure, and water damage becomes a threat to be taken very seriously.

The City of Edmonton is concerned enough that it has earmarked $2.4 billion for flood mitigation projects; officials will begin drafting a strategy this spring. Last November, Edmonton became the first Canadian city to make detailed flood maps available to the public. They show the level of flood risk to houses in 100 neighbourhoods.

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And Canadian insurers have started offering coverage for overland flooding—water from rivers and lakes that enters a home through windows and doors—which was previously unavailable in Canada. “As we see more of these big weather events, our members are looking to us for more inclusive coverage, in particular, better protection for water losses,” McDougall says. “We responded by reviewing our coverage and looking at ways to better protect policyholders.”

Last June, AMA Insurance rolled out its Enhanced Water Coverage Endorsement, which provides limited coverage for eligible policyholders for incidents like overflowing rivers, failed sump pumps and spring thaw. So if your window wells fill and leak into your basement during a heavy storm, the new endorsement now covers you. Or if flooding overwhelms your neighbourhood’s sewer system and causes water to back up into your home, you’re covered for that too.

McDougall notes the endorsement is far more comprehensive than what was previously available. “But there are coverage limits and eligibility requirements, so people should talk to their insurer to fully understand what their policy covers,” she says.

“Considering the amount of damage a sewer back-up or sump pump failure can do, Enhanced Water Coverage is a valuable investment.”

AN OUNCE OF PREVENTION…
We can’t control Mother Nature, but homeowners can be proactive about reducing risk:

• Install a backwater valve on your main sewer line
• Clear leaves and debris from eavestroughs
• Secure loose downspouts, pointing them away from the house
• Inspect your sump pump. Ensure it has power and the backup battery is charged
• Make sure shingles are in good condition and secure
• Shovel snow away from exterior walls
• Verify the land around your house slopes away from it
• Review your home insurance policy annually with your insurer to identify any changes, extra coverage needs and potential savings