Frank Craig thought he had insurance.
He’d filled out the paperwork, worked with a broker and paid for a policy, but when his Merritt-area home was flooded in November 2021, he found his coverage wouldn’t pay for the repairs needed.
“If you think you’ve got all your ducks in a row, you know what? Life comes your way.”
Based on his experience, Craig encourages others to carefully review their policies and fine print.
“You don’t know how good it is until you need it,” he said.
He’s not the only one reassessing his policies. Other residents who have lost or damaged their homes in extreme weather events have found theirs insurance coverage did not live up to expectations.
According to Insurance Bureau of CanadaThe insurance industry in Canada now spends approximately $2 billion per year on severe weather-related claims, up from an average of approximately $422 million per year between 1983 and 2008.
“Insurance can and should be there to cover the impact and get you back to normal,” said Dan Sandink, the research director Institute for Disaster Loss Reduction.
However, people need to make sure they are asking the right questions to get the coverage that will actually protect their home in the event of a flood, fire or other severe weather.
What type of coverage is available?
Sandink said the starting point is to find out if a homeowner can actually get the coverage they need, particularly with regard to flood coverage.
Some homes may not be offered certain types of flood insurance, or the premium may be high because of the risk.
There are some areas within communities like Merritt where overland flood insurance can sometimes cost thousands of dollars more to purchase than a person’s annual cost of insurance.
what are you paying for
While the insurance a contract between the consumer and the business, what is actually covered depends on the agreement.
Typically, insurance doesn’t differentiate between a fire in a home and wildfire, so coverage tends to be clearer. However, when there is a flood, things get complicated.
Sandink said people need to understand that overland flooding, extreme rain flooding and sewer securing are likely separate endorsements or amendments to their policies.
“It’s important to be clear about what you want insured and what you are actually insured for.”
What are your deductibles?
For some policies, the customer is responsible for paying certain costs in order to access coverage.
Sandink said people typically pay higher deductibles in exchange for lower annual premiums.
This could mean that policyholders might have to incur more upfront costs to access an insurance benefit for something like flood damage.
What difference does risk mitigation make?
In some cases, Sandink says, people may need to take steps to reduce the risk of flooding or wildfire in order to qualify for full insurance coverage.
This may include installing a back pressure valve or an emergency power system in the event of a flood.
If a policyholder is upgrading to reduce risk, they should see if insurers are offering them a lower rate.
what are the caps
Within some policies, certain types of coverage may be limited.
Sandink cites the example of flood insurance, where a home can be insured for full replacement value in the event of a fire, but only for a limited amount in the event of a flood.
“These sections of your policy, these endorsements, may have a different cap, so it’s important to understand what you’re actually insured for.”
He encourages people to look around at different providers to get the type of coverage that works for them and ask if there are any ways to remove caps.
Extreme weather demands are increasing
Claims related to extreme weather conditions have increased dramatically in recent years, according to Rob de Pruis, national director of consumer and industry relations at the Insurance Bureau of Canada, but it’s important to keep an eye on the increase.
He said the industry pays out a total of $40 billion in claims annually. While the $2 billion annual spend on severe weather is significant, it is not a large percentage overall.
As claims have increased, more people have expressed concern about the coverage they had.
Merritt Mayor Mike Goetz said he’s heard from many flood-affected residents who have been struggling to navigate the insurance claims process.
“We’ve had some issues with a few companies that have been just awful.”
However, De Pruis said people are often upset when they realize the coverage they are paying for doesn’t cover what they thought it would.
“A lot of the disagreements or misunderstandings are just because people misinterpret their insurance coverage. Your insurance policy doesn’t cover everything.”
Consumers in BC can contact the with complaints about insurance companies BC Financial Services Authority. If the concern relates to brokers, people can contact them Insurance Council of BC.
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