Up to 10% of homes could now be ‘uninsurable’ because of flood risk. Could yours be one?

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Many homeowners are unprepared for flooding because they lack vital information, thanks to unclear real estate regulations, incomplete flood maps, and the insurance industry withdrawing from high-risk areas. Market found in the investigation.

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Market Homeowners also found themselves losing flood protection because of multiple claims, or especially because of the increased risk of climate change. The Insurance Bureau of Canada (IBC) warns that this is a situation in which more Canadians could find themselves.

  • Watch the full Marketplace investigation tonight at 8:30 (8:30 NT) on businesshala-TV and businesshala Gems
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IBC told Market It estimates that six to 10 percent of Canadian homes are currently uninsurable due to flooding, and this estimate may increase as more insurance companies update their risk assessments for the growing threat of climate change.

“As risks from climate change increase, yes, more Canadians may be uninsured,” said Craig Stewart, IBC vice president for federal affairs.

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according to a 2019 Federal Government ReportCanada’s climate is warming at twice the rate of the rest of the world, and the IBC estimates that currently 1 in 10 Canadian homes Some are at high risk of flooding and some are facing potential recurrent floods in the next 20 years.

But will potential homeowners be warned about that risk? going undercover, posing as new home buyers in Ontario, a Market The team found that there is no Canada-wide requirement for agents or sellers to warn potential buyers that they are moving to a flood-prone area. Market On two occasions it was reported that the houses were not in floodplains when public data shows otherwise. In another test, a builder posing as a potential home seller also found that agents did not always advise him to disclose past flood damage.

The recent floods in British Columbia have made flood insurance coverage at the top of the issue for many homeowners, as some residents are unable to find coverage. for provincial disaster assistance, and others assess what coverage they have as the cleaning begins,

‘They’re trying to protect their money’

But in some cases, even being prepared is not enough. Derrick Teracita knew his home in Richmond Hill, north of Toronto, was in a floodplain and thought he had enough coverage, until he got his insurance renewal this year. In May, his insurance provider told him that he was taking away the water insurance of his land. Reason: Increasing severity of weather due to climate change.

“I was a little nervous, but then again it’s an insurance company, they’re trying to protect their money,” Teracita said. Market,

look | Insurance nightmare: Many Canadians are not protected from flood disasters:

Overland flood insurance generally protects homeowners from flooding from bodies of water flowing over dry land. According to the IBC, protection against flooding due to bursting of pipes or equipment is usually covered in most home policies. Sewer Backup Protection is also commonly available as an add-on. But after heavy flooding in southern Alberta in 2013, overland flood insurance only became an option in Canada in 2015, which it was ranked as at the time. The most expensive natural disaster in Canadian history,

Market Connected Teracita to an insurance expert to better understand her situation. He then contacted his insurance broker to see if his provider could reinstate his coverage if he took steps to protect his home. The answer was no.

‘Insurance will become a luxury for the rich’

“We can’t really offer coverage because again, this no longer applies to your area,” the broker told Terracita over the phone. Market The cameras rolled. “Even if there was some sort of mitigation, it would still not apply.”

Market Shows Terracita’s experience with its insurance company to Jason Thistlethwaite, an associate professor in the School of Environment, Enterprise and Development at the University of Waterloo in Ontario.

“It’s unfortunate, but insurance companies are businesses and they’re looking at their bottom line and they’re going to decide on their risk appetite,” said Thistlethwaite, who said floods are the most costly and common threat in Canada.

Thistlethwaite worries that many more Canadians will soon find themselves in Terracita’s place.

“Insurability – or the market where insurance is available and affordable – is eroding in Canada,” Thistlethwaite said. “Unless we do more to manage climate risk, insurance will become a luxury for the rich and unaffordable for most.”

Insurance Industry Responds

Stewart from IBC agrees that insurance companies need to do a better job of encouraging customers like Terracita who want to be proactive in protecting their homes.

In a competitive market, he says, customers like Teracita may shop around for coverage. However, he acknowledges that finding another option is not guaranteed and the industry has its limits when it comes to land insurance protection.

“Industry’s New [overland flood protection] In Canada, but we will only be able to provide a certain amount of protection. We need to cooperate with the government, especially those who will continue to live in the most at-risk areas in the country.”

The solution proposed by IBC is a national high-risk residential flood insurance program, which would provide insurance to residents in the most flood-prone areas, funded by the federal government.

This is an idea the Liberal government is studying as part of National Task Force on Flood Insurance and Rehabilitation, which was formed last year. The group is also studying options to relocate people living in frequently flooded areas.

Task force member Stewart, via IBC, says he will present recommendations to Emergency Preparedness Minister Bill Blair in the spring, but the program is unlikely to begin until 2023 or 2024.

“We need everyone on deck, and the insurers will do their utmost to solve the problem, but we can’t do it alone,” Stewart said.

Asked by businesshala News about the state of insurance during a news conference in Ottawa last week, Blair said the recent floods in British Columbia underscore the importance of the task force’s work.

“I think, it adds an element of urgency to the insurance industry and our work with the development of the National Flood Insurance Scheme,” Blair said.

Government-backed flood insurance comes with its share of problems. In the US, the National Flood Insurance Program is short of US$20 billion and is often criticized for using outdated information and encouraging reconstruction in problem areas.

Landlord unaware of risk

Despite dire warnings about the effects of climate change and the threat of flooding, this issue is not always on the mind. A 2020 survey by Partners for Action, a climate solutions network based at the University of Waterloo, found that only six percent of Canadians living in designated flood-risk areas knew they lived in such an area, and only a quarter said their The insurance company discussed flood coverage options with them.

In Toronto, Woody Abbey recently moved into his home, but did not realize that the neighborhood is a floodplain designated by the Toronto and Area Conservation Authority. Market Knocked on his door. He was also not sure that his home insurance policy covered him against all kinds of floods.

Later Market Connecting him to an insurance specialist, he contacted his provider and found that he was in fact fully covered for several flood scenarios, including land.

“Getting that confidence, getting that peace of mind has been a very satisfying experience to tell you honestly,” Aboy told Market,

No Canada-wide requirement to disclose future flood risk

Aboy and Other Landlords Market Said that when he bought his house, he was not informed that there was a risk of possible flooding.

part of the challenge Market It has been found that disclosure rules regarding future flood risk are vague and vary across countries. This is not information real estate agents may know how to find, or the flood mapping in the area may be out of date or incomplete.

In a secret test, Market Presented as buyers viewing Greater Toronto Area properties located in Flood Plains – Designated Areas publicly available maps by the Toronto and Area Conservation Authority. The result: Agents selling two out of four properties refused homes that were at risk of potential flooding.

Bazaar: “I noticed there’s a waterway nearby. I’m just wondering, is there a flooding problem, or is the flood a concern for that area?”

Agent: “As for that property? No, it’s too far.”

Bazaar: “So it’s not a floodplain or anything?”

Agent: “No no no.”

Bazaar: “So we shouldn’t be worried about that?”

Agent: “No, no.”

Later, as a seller seeking to land a home that had suffered previous flood damage, a builder called agents in five cities: Vancouver, Calgary, Winnipeg, Toronto and Montreal. Market found that nine out of 10 agents were clear that previous floods should be disclosed. But an agent said that if the cause of the flood had been repaired, there was no need to disclose.

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However, the agent’s advice appears to be consistent with the information Market Obtained from the regulator in his home province, the Real Estate Council of Alberta (RECA). “If the defect is properly corrected, there is no longer a defect, and disclosure is not required,” said RECA.

Disclosure rules in some provinces also leave some room for interpretation. For example, the Real Estate Council of Ontario (RECO), the regulator in that province, says that past floods are “often” considered a latent fault – defined as…

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