Natural disaster insurance: is your home prepared?

Natural disasters are becoming more frequent across Canada. In 2024, insured damage from extreme weather events exceeded $8 billion for the first time in Canadian history. From wildfires in British Columbia, hailstorms in Alberta, to flooding in Ontario, as climate change intensifies, the need for a comprehensive home insurance plan is all the more important. That said, many homeowners are unaware of the ins and outs of their homeowners' insurance policy, the risks they may face, and whether additional coverage is needed to bridge potential gaps in coverage. This is where natural disaster home insurance comes into play.

What is natural disaster insurance?

Natural disaster coverage, sometimes referred to as catastrophic or disaster insurance, provides coverage for damages that arise as a result of wildfires, floods, and severe storms. Currently, in Canada, standard home insurance policies typically only protect against fires, wind, and hail, which often exclude coverage for these types of natural disasters.

To ensure you're prepared for the unexpected, opting for optional policies or endorsements in addition to standard homeowners insurance is highly recommended.

Why add-on home insurance policies for natural disasters matter for Canadians

Canada has a diverse geography, which means different regions will experience various natural hazards that can lead to substantial amounts of damage. For example, while British Columbia is known to experience seasonal wildfires, the risk of a catastrophic earthquake is also high.

Alberta is also known for having devastating wildfires and extreme hailstorms, which just last year caused $3.25 billion in damage across the city of Calgary, while Eastern provinces experience hurricanes and heavy rainfall that leads to flooding and other damages.

What standard homeowners insurance typically covers

Standard homeowners' policies will generally cover damage caused by some natural events, but not all. In most cases, you'll have coverage for fires (wildfires included), lightning damage, windstorms, hailstorms, falling or flying debris, and some types of water damage.

For example, coverage for water damage depends heavily on where the water originates. While a burst pipe is generally covered by insurance companies, water entering your home due to localized flooding is not. Luckily, there are options to add flood damage insurance and coverage for other catastrophic events to your standard insurance policy to ensure you are covered, which we'll go over in more detail below.

What a standard homeowners policy doesn't cover

There are numerous perils excluded from standard home insurance policies, including:

• Overland floods: Overland flooding from natural waterways like lakes or rivers, including storm surges, is often not covered by home insurance companies unless homeowners specifically purchase flood insurance.

• Sewer backups: Sewer backups can occur in properties with basements and areas with older municipal plumbing. When heavy rainfall hits, sewer systems can back up into your home, causing substantial interior property damage. Again, sewer coverage is not automatically included, but can be added to standard home insurance policies.

• Earthquakes: Earthquakes, including landslides and sinkholes, are not covered by basic policies. In high-risk areas, such as British Columbia, earthquake insurance needs to be purchased separately.

Other exclusions include damage from poor maintenance, mould from ongoing moisture, and wear and tear caused over time.

Provincial considerations & insurance regulations

The type of natural disaster coverage you need can vary significantly depending on what province you live:

British Columbia

In British Columbia, earthquake insurance is often offered by insurance companies, given that the province is located along the Cascadia fault line.

Alberta

Many parts of Alberta are prone to flooding, which is why many insurance companies offer flood insurance as an optional endorsement.

Ontario

In Ontario, where severe storms and basement flooding are becoming more common, sewer backup and overland flood insurance are often recommended.

Quebec

Given Quebec's proximity to the East Coast, the remnants of hurricanes can lead to severe flooding and other damages due to heavy rainfall and high winds.

To ensure your home is protected, it's essential that you understand what natural disaster risks you face in order to determine whether additional endorsements are needed.

How to choose the right homeowners insurance policy

Choosing the right insurance policies to protect your property from damages caused by natural disasters starts with knowing what risks you're home is susceptible to. The first thing to do is:

Ask yourself

Start with these self-check questions:

• Do you live in a floodplain or near the coast?

• Do you live in a wildfire zone?

• Is your property located in an earthquake zone?

Using municipal flood maps and disaster readiness protocols can help you assess the perils you're exposed to.

What to ask your insurer

Ask your insurer specific questions:

• Is overland flood, sewer backup, or earthquake coverage included in my standard coverage?

• What are the deductibles and coverage limits for each type of disaster?

• Are there any exclusions based on where my home is located?

Next steps

Once you've gotten some clarity on the types of insurance you need, make sure to get a quote from more than one insurer to guarantee you're getting the right coverage for the right price.

Tips for filing a claim after a catastrophe

• Ensure safety: Don’t enter unsafe areas until they've been cleared.

• Document all damage: Take as many photos or videos before the cleanup occurs as possible.

• Keep receipts: If you need to relocate, keep track of all emergency expenses.

• Contact your insurer: Call your insurance company to report your claim as soon as possible.

• Be honest and thorough: To ensure your claim is approved, always be truthful with your adjuster.

How BrokerLink can help

Don't wait until disaster strikes, protect your property and loved ones with homeowners insurance you can feel confident in. At BrokerLink, we help homeowners across Canada purchase customized home insurance for an affordable price.

To work with a broker from our team, contact us over the phone or by email to speak with them directly. You can also compare quotes from top insurance companies from the comfort of your own home using our online quote tool.

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