What’s With This Water Stuff?


Home insurance was first introduced in order to protect homeowners against fire. In fact, the beginning of fire insurance can be traced to London, England in 1666 when a fire broke out, destroying nearly the entire city. Over time, policies have evolved to include additional coverages for things such as wind damage, theft, etc. We are now on the verge of another major change; introducing optional coverages for specific types of water damage.

Water is the new Fire

Traditionally, flooding has not been covered by home insurance policies in Ontario and yet the majority of home insurance claims today are now related to water damage. Initially, companies were quick to develop optional coverage to protect homeowners against sewer back up, but it has not been until recently that some companies have begun offering new coverages such as overland water, and ground water.

New options to protect against water

Homeowners may now be available to purchase these new optional coverages to protect their dwelling against water damage. But what do these coverages really mean?

• Sewer back up –protects your home against the sudden and accidental the backing up of sewers and drains.
• Overland Water –is designed to protect you against sudden and accidental entrance of surface water including damage caused by fresh water from rivers and lakes or water accumulated as a result of heavy rainfall.
• Ground Water –protects you from sudden and accidental entrance of water through basement walls, floors and foundations.

Most companies will offer some form of Sewer Back Up coverage depending on your location, however overland water and ground water are only available from a handful of companies at this time.

Read the fine print

Most companies contain a clause which, in the event of a claim due to two perils (sewer back up and overland water for example), will limit coverage to the lesser of the applicable coverages. This is often referred to as the “Anti-Concurrent Causation Clause”.

For example, assume you purchased sewer back up and overland water, but not ground water coverage. You then experience a loss where the sewers are backing up AND water is pouring in from your foundation walls. Because you did not purchase ground water coverage, the company may deny your entire claim.

Here is another example. Assume you purchased sewer back up at $100,000 limit, and overland water at only $10,000 limit and you suffer a loss where your sewers are backing up AND rain water is rushing into the basement through the windows. Since the overland water is the lesser limit, you may be limited to the $10,000 overland water coverage in this case.

For the above reasons, it is important that you read the fine print of your policy and purchase the necessary coverages for your dwelling.

Prevention is the Key

Of course, the best plan of action is to avoid a water claim through proper prevention measures such as proper grading or the installation of a back-up water valve. Please click here for more tips to protect your home from water damage.

Be sure to review your policy with your insurance provider to find out what options are available to you and what clauses may apply. Since each company offers different coverages and different wordings, be sure that your broker explains different options from different companies to you. If you don’t have a broker, please feel free to contact us and we would be happy to help!

Water damage is quickly becoming the most important, and most confusing, coverages on your home insurance policy. Be sure to speak with your broker and know your options.

Water damage is quickly becoming the most important, and most confusing, coverages on your home insurance policy. Be sure to speak with your broker and know your options.